Initiatives to restore natural ecosystems have had little success in arid and hyperarid ecosystems. In this context, the natural seedling establishment is particularly affected by drought patterns and climatic variability. Likewise, the effect of plant provenance on forest restoration success remains unclear, although previous studies have concluded that some seed locations might be better able to tolerate water stress. In this study, we examined the physiological mechanisms involved in the drought stress resistance of Prosopis tamarugo and Prosopis alba seedlings from different arid and hyperarid locations of the Atacama Desert in northern Chile. We measured the xylem water potential (Ψ), cuticular transpiration (Ec), specific leaf area (SLA) and pressure-volume curves at the intrapopulation and interpopulation levels of seedlings of both species subjected to three drought-induced treatments. In addition, plant characteristics such as seedling height (Sh), stem diameter (Sd), leaf biomass (Lb), root biomass (Rb) and seedling survival (Ss) were measured during the treatments. Seedlings of most hyperarid habitats had the highest values of Ψ and water content relative to the turgor loss point, as well as decreased SLA, especially during the strongest drought treatment. Ψ was strongly correlated with Sh in both species, and soil humidity was correlated with Sd. This study highlights the high variability of physiological responses to water stress in both species at the interpopulation and intrapopulation levels, which provides us with a powerful seed selection tool for future reforestation programmes aimed at the early selection and genetic improvement of species of the Prosopis genus.