Cloud cover drastically and instantaneously reduces net radiation and available energy. Appearance of clouds will therefore alter the surface energy balance and elicit response of plant canopy temperature (TC). The attenuated shortwave radiation and altered TC during the presence of clouds may subsequently affect the crop water stress index (CWSI). Therefore, to correctly interpret TC measurements, the effect of clouds must be understood. The objective of this work was to study the effect of abrupt changes in solar radiation due to varying cloudy conditions on TC and CWSI for olive trees. Results from two separate experiments are presented, both comparing different levels of water status of Barnea olive trees. The first experiment was conducted in a commercial orchard where five irrigation levels were applied. Thermal images were acquired simultaneously with stomatal resistance measurements on a day with clear skies. The second experiment was conducted on single trees planted in lysimeters. Irrigation was withheld for five of 15 trees for 6 days until they were severely stressed. Thereafter, irrigation was resumed to levels higher than the transpiration rates. Throughout the stress and recovery periods, water status measurements were conducted daily between 12:00 and 14:00 on all trees. On the day of maximum stress, thermal images of well-watered and stressed trees were acquired every minute throughout a time sequence during which large fluctuations in radiation due to cloud cover were observed. The most pronounced result of this study was the greater response of stressed, compared to well-watered, trees to abrupt changes in radiation intensity. When solar radiation was high, the CWSI of stressed trees reached 0.8, while the CWSI of well-watered trees was near 0. When solar radiation dropped due to clouds, the CWSI of the stressed trees decreased to ~0.3, while that of well-watered trees continued to fluctuate around 0. This finding implies that application of thermal imagery for water status detection would require very high radiometric resolution and constant reference measurements. For routine monitoring in commercial olive orchards, this could be facilitated by strategic maintenance of a few well-watered trees.