Groundwater is a key component of the water cycle in arid ecosystems due to low precipitation, high surface runoff and high evaporative demand. It has a direct influence on the growth and development of natural vegetation, species diversity, and ecosystem metabolism. This study reports on the variation in groundwater levels and quality in the western region of the Grurbantonggut Desert over three consecutive years. We investigated how groundwater level and quality affect physical and chemical properties of soil, species diversity, and the growth and regeneration of Haloxylon ammodendron. We established 20 inspection wells for measuring groundwater level over a period of three consecutive years. These inspection wells were set up at intervals of 7km to 10km from west to east in longitude and north to south in latitude, which according to the situation of the degenerate and distribution of Haloxylon ammodendron population in the study area. The study area contain habitat which is plain and small and big sand-dunes. The results show that groundwater levels varies widely in this area, ranging from 3.3m to 24.2m, averaging 6m to 8m. The soil physical-chemical factors also vary greatly across this area. Soil EC, pH, Cl^- and SO₄^2- have higher values at depths of 0cm to 40cm; their coefficients of variation decrease at greater depths. The groundwater level exhibits seasonal variation, influenced by upstream irrigation. The highest and lowest groundwater levels appear in April and July, respectively. The Manas River plays an important role in recharging groundwater in the study area, which of course varies between years. Approximately 75% of the groundwater level found in the inspection wells rises in 2010 compared with last year, which rises seasonally by 4.3cm on average, while the mineralization increases to 1g/L on average. The groundwater level has a weak effect on species diversity in the degraded area, while it has a significant impact on the growth of Haloxylon ammodendron. We find that the suitable groundwater level for growing Haloxylon ammodendron is 5m to 8m and the optimal mineralization level is less than 4g/L. Haloxylon ammodendron populations decline when groundwater level is more than 8m. When the groundwater level is less than 4m, groundwater mineralization causes salt deposition on the soil surface. This reduces the level of species diversity significantly and blocks the regeneration of Haloxylon ammodendron. This in turn leads to declines in the Haloxylon ammodendron population. In summary, the depletion of the Manas River related to agricultural irrigation influences the groundwater levels and the quality of the ecosystem in the western Grurbantonggut Desert. The decline in the Haloxylon ammodendron population is significantly correlated with groundwater levels. This should be considered in future natural resource conservation planning for this area.