Tree death is not always preceded by a visible decline in vigor (canopy dieback) or a progressive loss in crown volume. Identifying early-warning signals of incipient decline can help to implement the necessary measures to prevent tree death. The aim of this work is to understand what functional alterations preceded the massive drought-induced death of adult Pinus canariensis trees in an arid stand, located in the Canary Islands. To this aim, we analyzed interannual variations in earlywood and latewood width, wood density and anatomy, and carbon isotope composition, and the relationships among these variables, in dead and living trees from 1980 to 2013. Dead trees grew less since the 1990′s, produced fewer parenchyma rays and resin canals, and exhibited a trend of decreasing latewood density and a marked shift in carbon isotope discrimination over the last 34 years that were reversed in living trees. Higher wood density in living trees resulted from thicker tracheid cell walls rather than narrower lumens. The intrinsic water use efficiency shifted from higher to lower values in dead trees after the 2000s. These results suggest a carbon limitation to maintain hydraulic safety under xylem tension, as well as to maintain storage and defense capacity, which can render trees more vulnerable to severe drought episodes. A long-term trend of decreasing tree-ring density and a reduced intrinsic water use efficiency in the short-term can be early-warning signals of carbon limitation and tree decline in drought-stressed P. canariensis. The analysis of these variables can be used to assess tree decline risks in similarly vulnerable conifer populations inhabiting drought-prone regions.