Hemp (Cannabis sativa L.) may be a suitable crop for the bio-economy as it requires low inputs while producing a high and valuable biomass yield. With the aim of understanding the physiological basis of hemp's high resource-use efficiency and yield potential, photosynthesis was analysed on leaves exposed to a range of nitrogen and temperature levels. Light-saturated net photosynthesis rate (Amax) increased with an increase in leaf nitrogen up to 31.2 ± 1.9 μmol m−2 s−1 at 25 °C. The Amax initially increased with an increase in leaf temperature (TL), levelled off at 25–35 °C and decreased when TL became higher than 35 °C. Based on a C3 leaf photosynthesis model, we estimated mesophyll conductance (gm), efficiency of converting incident irradiance into linear electron transport under limiting light (κ2 LL), linear electron transport capacity (Jmax), Rubisco carboxylation capacity (Vcmax), triose phosphate utilization capacity (Tp) and day respiration (Rd), using data obtained from gas exchange and chlorophyll fluorescence measurements at different leaf positions and various levels of incident irradiance, CO2 and O2. The effects of leaf nitrogen and temperature on photosynthesis parameters were consistent at different leaf positions and among different growth environments except for κ2 LL, which was higher for plants grown in the glasshouse than for those grown outdoors. Model analysis showed that compared with cotton and kenaf, hemp has higher photosynthetic capacity when leaf nitrogen is <2.0 g N m−2. The high photosynthetic capacity measured in this study, especially at low nitrogen level, provides additional evidence that hemp can be grown as a sustainable bioenergy crop over a wide range of climatic and agronomic conditions.