Trunk internal decay is a common phenomenon in forest ecosystems, causing the loss of forest resources. Euphrates poplar (Populus euphratica Oliv.) is the only constructive tree species of the desert riparian forests along the Tarim River in northwestern China. The ecosystem stability of these forests has been damaged due to widespread internal decay or hollow rot in many tree trunks. However, forest resource conservation is difficult due to the unclear spatial patterns of P. euphratica trunk decay under different water conditions and tree morphology in the middle (MTR) and lower reaches (LTR) of the Tarim River. We conducted a field experiment and lab analysis to assess the reliability of the ARBOTOM® 2D stress wave Non-Destructive Testing (NDT) technique on P. euphratica populations. We explored the quantitative characterization method and the spatial distribution patterns of P. euphratica trunk internal decay in the MTR and LTR. Our study found that (1) the accuracy of the stress wave NDT technique in detecting trunk decay of P. euphratica in the arid desert area was more than 80%; The severity of internal trunk decays can be quantitatively characterized by the combination of the Matlab Image Processing Toolbox, (2) the trunk decay proportion of P. euphratica showed an increasing trend with the tree height in the MTR. The LTR first increased, then decreased. The degree of decay was highest when the tree height was 6–7 m. The trunk decay proportion of individual trees positively correlated with the diameter at breast height and crown loss (p < 0.001) and negatively correlated with the crown diameter (p < 0.001). The higher the decay occurrence, the worse the individual size was, and vice versa, and (3) the decay proportion of the P. euphratica showed an overall increasing trend with an increase in groundwater depth. The trunk decay was significantly higher in the LTR compared to the MTR at the same distance of 300–1050 m from the river channel. Our findings suggested that the trunk decay in P. euphratica had a higher difference among different tree morphology, and the occurrence of decay in the LTR was much higher than in the MTR. The water stress at the site is one of the leading factors in internal defects in the riparian forests along the Tarim River. The results provide a theoretical basis and scientific support for desert riparian forest ecosystems’ conservation and sustainable management.