Climate change and anthropogenic exploitation will increase groundwater lowering rates and aggravate groundwater shortage, particularly in desert ecosystems that rely heavily on groundwater. We conducted detailed studies about morphological and ecophysiological traits of two Haloxylon ammodendron communities across different groundwater depths in the Gurbantonggut Desert in China during an extreme drought period. When photosynthetic twig temperatures exceeded 45°C, photosynthesis was suppressed and dropped to zero, while stomatal conductance and transpiration rate increased rapidly. This decoupled behavior may cool photosynthetic tissues to prevent permanent damage. The optimum temperature decreased by ∼3°C in H. ammodendron at deep groundwater sites with less soil-water availability, which contributed to improving water use efficiency (WUE) at lower temperatures. H. ammodendron at the deep groundwater site had lower photosynthetic twig size and plant height while higher proportion of twig and branch biomass, which induced a denser canopy structure, and they had greater leaf dry mass content, photosynthetic pigments, and non-structural carbohydrates, and more negative predawn shoot water potential. Overall, our study indicates that H. ammodendron could alleviate adverse effects of reduced soil water availability and maintain photosynthetic capacity through multiple morphological and physiological adjustments. This establishes the basis for predicting responses of desert shrubs to groundwater drawdown.