Abstract The structural and functional traits of coniferous trees can reflect their growth states and adaptive strategies to a harsh environment. However, it is still unclear if and how hydraulic traits of subalpine conifers change with altitude. Therefore, the changes in stem hydraulic characteristics of Abies fabri along an elevational gradient (2700–3700 m a.s.l.) were identified in a subalpine ecosystem in southwest China and linked to anatomical properties. Xylem hydraulic efficiency decreased with increasing elevation. Surprisingly, higher hydraulic dysfunction and vulnerability to embolism occurred at higher altitudes. The trade‐off between hydraulic efficiency and safety was weak in A. fabri at higher elevations. Low temperature and superfluous precipitation may be the main constraints for hydraulic function and mechanical strength ((t/b)2)) in plants at high elevations (p < 0.05). The strongly limited hydraulic transport system reflected the severe growth constraint of A. fabri at high elevations. Although series of anatomical traits varied with elevation (e.g. smaller mean diameter of tracheid, mean hydraulic conduit diameter and mean pit aperture diameter at higher altitude) and revealed the adaptive strategies to enhance embolism resistance, thickness‐to‐span ratio ((t/b)2) played a dominant role in the trade‐off between hydraulic efficiency and safety. Thickness‐to‐span ratio was positively correlated with stem hydraulic conductivity but negatively correlated with percent loss of conductivity and water potential at 50% loss of conductivity, (t/b)2 and specific leaf area. Therefore, plants with better hydraulic and growth states at low elevations could allocate more resources to building up solid mechanical supporting systems to cope with high wind load, while those at high elevations with impaired growth states and limited hydraulic functions had to invest more resources in leaves under the harsh environment. The weak trade‐off between hydraulic efficiency and safety (lower hydraulic efficiency and high risk of embolism) could limit the growth and distribution of A. fabri at timberlines; however, global warming trends may facilitate hydraulic transport and benefit plants' growth in the future. Read the free Plain Language Summary for this article on the Journal blog.