The growth and survival of woody plant species is mainly driven by evolutionary and environmental factors. However, little is known about the hydraulic mechanisms that respond to growth limitation and enable desert shrub survival in arid habitats. To shed light on these hydraulic mechanisms, 9-, 31-, and 56-year-old Caragana korshinskii plants that had been grown under different soil water conditions at the southeast edge of the Tengger Desert, Ningxia, China were used in this study. The growth of C. korshinskii was mainly limited by soil water rather than shrub age in non-watered habitats, which indicated the importance of maintaining shrub survival prior to growth under drought. Meanwhile, higher vessel density, narrower vessels and lower xylem hydraulic conductivity indicated that shrubs enhanced hydraulic safety and reduced their hydraulic efficiency in arid conditions. Importantly, xylem hydraulic conductivity mediated by variation in xylem hydraulic architecture regulated photosynthetic carbon assimilation and growth of C. korshinskii. Our study highlights that the synergistic variation in xylem hydraulic safety and hydraulic efficiency is the hydraulic mechanism limiting growth and maintaining survival of C. korshinskii under drought, providing insights into the strategies for growth and survival of desert shrubs in arid habitats.