Diverse algae possess vegetative desiccation tolerance, the ability to recover from extreme desiccation without forming specialized resting structures. Green algal genera such as Tetradesmus (Sphaeropleales, Chlorophyceae) contain both terrestrial and aquatic species, providing an opportunity to compare physiological traits associated with the transition to land in closely related taxa. We subjected six species from aquatic and terrestrial habitats to three desiccation treatments varying in final relative humidity followed by short- and mid-term rehydration. We tested the capacity of the algae to recover from desiccation using the effective quantum yield of photosystem II as a proxy for physiological activity. The degree of recovery was dependent both on the habitat of origin and the desiccation scenario, with terrestrial, but not aquatic species, recovering from desiccation. Distinct strains of each species responded similarly to desiccation and rehydration, with the exception of one aquatic strain that recovered from the mildest desiccation. Cell ultrastructure was uniformly maintained in both aquatic and desert species during dehydration and rehydration, but staining with an amphiphilic styryl dye indicated desiccation-induced damage to the plasma membrane in the aquatic species. These analyses demonstrate that terrestrial Tetradesmus possess the vegetative desiccation tolerance phenotype, making these species ideal for comparative omics studies.