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The hypothesis that water relations and growth of phreatophytic Tamarix ramosissima Ledeb. and Populus euphratica Oliv. on dunes of varying height in an extremely arid Chinese desert depend on vertical distance to a permanent water table was tested. Shoot diameter growth of P. euphratica was inversely correlated with groundwater depth (GD) of 7 to 23 m (adj. R² = 0.69, P = 0.025); growth of T. ramosissima varied independent of GD between 5 and 24 m (P = 0.385). Pre‐dawn (pd) and midday (md) water potentials were lower in T. ramosissima (minimum pd −1.25 MPa, md −3.6 MPa at 24 m GD) than in P. euphratica (minimum pd −0.9 MPa, md −3.05 MPa at 23 m GD) and did not indicate physiologically significant drought stress for either species. Midday water potentials of P. euphratica closely corresponded to GD throughout the growing season, but those of T. ramosissima did not. In both …