Methods to accurately estimate the biophysical and biochemical properties of vegetation are a major research objective of remote sensing. We assess the capability of the MODIS satellite sensor to measure canopy water content and evaluate its relationship to ecosystem exchange (NEE) for an evergreen forest canopy. A time-series of three vegetation indexes were derived from MODIS data, the Normalized Difference Vegetation Index (NDVI), the Normalized Difference Water Index (NDWI), and the Normalized Difference Infrared Index (NDII), which were compared to physically based estimates of equivalent water thickness (EWT) from the airborne AVIRIS hyperspectral instrument over a temperate conifer forest in southwestern Washington. After cross-calibration of the imagery, water indexes derived from MODIS showed good agreement with AVIRIS EWT, while the NDVI was insensitive to water content variation. Three years of NEE data from eddy covariance measurements at the Wind River AmeriFlux tower were compared with the time series of MODIS indexes, which show seasonal water content has similar trajectory with NEE. In contrast, the MODIS NDVI time series did not yield a good relationship with NEE. This study demonstrates the potential to use MODIS water indexes for spatial and temporal NEE estimation at regional and global scales in appropriate ecosystems.