We have expanded the Monte Carlo, ray-tracing model FLIGHT in order to simulate photosynthesis within three-dimensional, heterogeneous tree canopies. In contrast to the simple radiative transfer schemes adopted in many land-surface models (e.g., the Big Leaf approximation), our simulation calculates explicitly the leaf irradiance at different heights within the canopy and thus produces an accurate scale-up in photosynthesis from leaf to canopy level. We also account for both diffuse and direct sunlight. For a Siberian stand of Scots pine Pinus sylvestris, FLIGHT predicts observed carbon assimilation, across the full range of sky radiance, with an r.m.s. error of 12%. Our main findings for this sparse canopy, using both measurements and model, are as follows: (1) Observationally, we detect a light-use efficiency (LUE) increase of only ≤10% for the canopy when the proportion of diffuse sky radiance is 75% rather than 25%. The corresponding enhancement predicted by our simulations is 10--20%. With such small increases in LUE, our site will not assimilate more carbon on overcast days compared to seasonally equivalent sunny days; (2) the scale-up in photosynthesis from top-leaf to canopy is less than unity. The Big Leaf approximation, based on Beer's law and light-acclimated leaf nitrogen, overpredicts this scale-up by ≥60% for low sky radiance (≤500 ¿molPAR m-2 s-1); (3) when leaf nitrogen is distributed so as to maximize canopy photosynthesis, the increase in the canopy carbon assimilation, compared with a uniform nitrogen distribution, is small ($simeq$4%). Maximum assimilation occurs when the vertical gradient of leaf nitrogen is slightly shallower than that of the light profile.