The morphological characteristics of crop roots, especially the plasticity of fine roots, are directly related to the crop’s ability to obtain soil water. Mulched drip irrigation can effectively regulate soil water distribution to achieve high cotton yield with reduced water consumption. In the previous study, from the perspective of root-shoot coordination, we found that mulched drip irrigation reduced the growth redundancy of roots and improved the root productivity of cotton, thus achieving the goal of water-saving and increased yield. However, it is unclear if and how mulched drip irrigation enhances absorptive capacity of roots via regulating dry and wet soil areas and optimizing fine root morphology and distribution compared with traditional flood irrigation. To achieve this, the effects of fine root plasticity on the absorptive capacity of roots were studied in a two-year field experiment. Mulched drip irrigation (conventional drip irrigation and excessive drip irrigation) and traditional flood irrigation (reduced flood irrigation and conventional flood irrigation) were used, and soil water distribution and root distribution were determined. The results showed that compared with traditional flood irrigation, mulched drip irrigation significantly increased the soil water content (SWC) in the 0–60 cm soil layer and reduced the fluctuation amplitude of SWC at the flowering and boll stage of cotton. Mulched drip irrigation formed different dry and wet areas in the root zone, i.e., the SWC was higher in the shallow layer (0–40 cm) at 0–20 cm on both sides of the drip line, and most of the cotton roots were in the wet area. The higher SWC increased the distribution of fine roots in this area and shaped the shallow fine root system, which enhanced the cotton plant’s ability to absorb soil water. Statistical analysis showed that the higher fine root biomass in the 0–40 cm soil layer at the late full boll stage of cotton under mulched drip irrigation was beneficial to increase aboveground biomass, thus increasing total bolls and seed cotton yield. However, compared with the irrigation amount of field production (390 mm), an excessive amount of irrigation (600 mm) reduced the seed cotton yield of mulched drip irrigation, resulting in the decrease of irrigation water use efficiency (IWUE). Therefore, mulched drip irrigation optimizes the distribution of fine roots and enhances water uptake by effectively regulating the water–root relationship, and thus improves seed cotton yield and IWUE.