Populus euphratica is a dominant species in desert riparian forests in the Tarim River Basin. The survival and growth of P. euphratica seedlings is limited by water and nitrogen. In this experiment, a ¹⁵N isotope tracer technique was used to explore the effects of different water and nitrogen levels on nitrogen absorption, distribution, and utilization by P. euphratica at different growth stages. We studied the effects of nitrogen on the early morphogenesis of P. euphratica seedlings and on the mitigation of drought stress to improve the survival rate of seedlings. Seedlings of P. euphratica were subjected to four different soil water treatments (D₁, D₂, D₃, and D₄ with relative soil water contents of 20%-25%, 40%-45%, 60%-65%, and 80%-85%, respectively) and three nitrogen application levels (N₀, N₁, N₂:0, 3, 6 g·pot^-1) and then the growth index, nitrogen derived from fertilizer (Ndff), nitrogen distribution rate, and nitrogen utilization rate were determined. The results showed that P. euphratica seedlings had the best growth performance when the relative soil water content was 60%-65% (D₃) and the nitrogen application level was 3 g·pot^-1 (N₁). Under drought stress, there were significant differences in the Ndff values of different parts of seedlings under different nitrogen application levels, and the Ndff values were lower in the N₂ treatment than in the N₁ treatment. With greater soil water availability (D₃, D₄), the ¹⁵N taken up by the roots was preferentially transported to the above-ground plant parts during the early growth period (25 d). The Ndff was the highest, especially in the root system, in the late growth period (75 d). The distribution of ¹⁵N differed significantly among different parts of the seedlings. The ¹⁵N distribution rate was highest in the roots, but there was no significant difference in the ¹⁵N distribution rate among the N₀, N₁, and N₂ treatments. As seedling growth progressed, the roots had the highest nitrogen utilization rate, and this rate was significantly higher in the D₃N₁ treatment than in all the other treatments. Our results indicate that adding appropriate amounts of nitrogen can enhance the ability of plants to absorb nitrogen under slight drought stress.