Effects of water source relations on the facilitation of nitrogen (N) acquisition between N2-fixing species (NFS) and neighbor species require further investigation, especially in water- and N-limited conditions. Plant water sources and leaf physiological parameters of Hippophae rhamnoides and two neighbor species were investigated in pure and mixed plantations. Then, N stable isotope and N content of leaves were analyzed to examine the N facilitation of H. rhamnoides to neighbor species. Finally, interactions between plant water sources and N acquisition were detected using the dissimilarity analysis. H. rhamnoides and Pinus tabuliformis obtained water from similar soil depths, whereas, water sources were partitioned between H. rhamnoides and Ulmus pumila. Compared with pure plantations, P. tabuliformis and H. rhamnoides could not maintain a stable net photosynthetic rate (Pn) during the dry period in mixed plantation. However, H. rhamnoides and U. pumila in mixed plantation could alleviate drought effect on Pn through stomatal adjustments, comapred with pure plantations. Furthermore, H. rhamnoides facilitated N to neighbor species regardless of their water source relations, however, this facilitation only significantly improved the leaf N content of U. pumila. Water source partitioning, stomatal adjustment, and N facilitation promoted stable coexistence of NFS and neighbor species in water- and N-limited environments.