High elevation mountain forests in the European Alps are strongly affected by climate change. In this study we aimed to investigate the long- and short-term effects of climate on radial stem growth and tree hydraulics of the two dominant tree species at the forest line of the Eastern central Alps, European larch (Larix decidua Mill. and Swiss stone pine (Pinus cembra L). To this end, we analyzed tree ring widths from stem cores from five sites between 1990 and 2320 m above sea level (a.s.l.) and measured sap flow for three years and radial stem variation for four years at three sites between 1990 and 2100 m a.s.l. in an inner alpine dry valley in Northern Italy. We found that tree ring width of larch responded stronger to temperature and increased more with warming in the last decades than in Swiss stone pine. In the short term, low soil moisture reduced sap flow during the summer in Swiss stone pine but not in larch. Additionally, air vapor pressure deficit clearly reduced the number of days with radial stem growth in Swiss stone pine, leading to lower annual growth than in larch. Consequently, larch at high elevation might actually benefit from climate change at the expense of Swiss stone pine.