Incident irradiance on plant leaves often fluctuates, causing dynamic photosynthesis. Whereas steady-state photosynthetic responses to environmental factors have been extensively studied, knowledge of dynamic modulation of photosynthesis remains scarce and scattered. This review addresses this discrepancy by summarizing available data and identifying the research questions necessary to advance our understanding of interactions between environmental factors and dynamic behaviour of photosynthesis using a mechanistic framework. Firstly, dynamic photosynthesis is separated into sub-processes related to proton and electron transport, non-photochemical quenching, control of metabolite flux through the Calvin cycle (activation states of Rubisco and RuBP regeneration, and post-illumination metabolite turnover), and control of CO₂ supply to Rubisco (stomatal and mesophyll conductance changes). Secondly, the modulation of dynamic photosynthesis and its sub-processes by environmental factors is described. Increases in ambient CO₂ concentration and temperature (up to ~35°C) enhance rates of photosynthetic induction and decrease its loss, facilitating more efficient dynamic photosynthesis. Depending on the sensitivity of stomatal conductance, dynamic photosynthesis may additionally be modulated by air humidity. Major knowledge gaps exist regarding environmental modulation of loss of photosynthetic induction, dynamic changes in mesophyll conductance, and the extent of limitations imposed by stomatal conductance for different species and environmental conditions. The study of mutants or genetic transformants for specific processes under various environmental conditions could provide significant progress in understanding the control of dynamic photosynthesis.