Populus euphratica Oliv. and Populus pruinosa Schrenk. distributed widely in the upper reaches of Tarim River, China.P. euphratica played important roles in controlling the structure, function and sustainability of the ecosystems in Tarim basin because it had strong ability to survive in the desert. However, the population of P. euphratica was declined due to excessively exploite soil and water resources by human beings. This result dangered directly sustainable development of oasis′ agriculture and ecological balance. Photosynthetic and water physiological characteristics of P.euphratica and P.pruinosa were revealed to illuminate their ecological adaptation, and supply theoretical base to utilize rationally resources, protect dominant population and restore degraded ecosystem. We measured the diurnal courses of gas exchange using Li-cor 6400(LICOR,USA)once every two hours from 8:00am to 20:00pm in different months and water potential with pressure chamber(SKPM1400, UK)under natural condition,2006,and got data on net photosynthetic rate (Pn), transpiration rate (Tr), stomatal conductance (Gs), intercellular CO2 concentration (Ci), photosynthetic photon flux density (PPFD), leaf-to-air vapor pressure deficit (VPD), air to temperature (Ta),WUE was calculated by Pn/Tr. The results showed diurnal courses of Pn and Tr of P.euphratica and P.pruinosa were single peak curve in growth season except for August, but WUE were not significant variable regulation. Based on the analysis of stomatal limitation of photosynthesis using two criteria (Ci and Ls)suggested by Farquhar and Sharkey, it showed that the predominant cause of restricting Pn was non-stomatal limitation after 12:00. Compared with two plants, P.euphratica displayed the higher WUE because of its higher Pn and lower Tr, P.pruinosa displayed the lower Pn and WUE and the higher Tr. In the interval between of gas exchange measurements, we measured the water potential once every two hours. The diurnal courses of water potential and predawn, midday water potential were ‘V’ curve, daily variation range of water potential and monthly variation range of midday water potential of P.euphratica were the lower than that of P.pruinosa and water potential was not significant difference between two tree species. Both P.euphratica and P.pruinosa had the ability to endure drought with very low (more negative) water potential (Ψw) while P.euphratica had stronger ability to adjust stomatal conductance and decrease water loss according to degree of drought. Thus P.euphratica had better ecological adaptability and led to different population distribution.