How plants in arid and semiarid ecosystems respond to variations in environment variables is crucial for understanding survival strategy of the plants and assessing the impacts of climate change on terrestrial ecosystems. The objective of this paper is to explore physiological and ecological characteristics of photosynthesis, water use efficiency and light use efficiency of Stipa krylovii and Agropyron cristatum, two dominant species in typical steppe in Inner Mongolia, with focus on their relations to environmental factors. We used Component Analysis to identify major environmental factors and reveal the responses and strategic adaptation of S. krylovii and A. cristatum to climate change. The field experiment was conducted at typical semi-arid steppe in Duolun County, Inner Mongolia, China. We chose the dominant species S. krylovii and A. cristatum, and measured their photosynthetic characteristics in the growing season (DOY 155-265) by a portable photosynthesis system (Li-6400), furthermore,we monitored the change of environmental factors by a micro-meteorological observation system. The results shows that: (1) there was a significant correlation between photosynthetically active radiation (PAR) and water use efficiency (WUE) of A. cristatum (P <0.01), but there was no significant correlation between PAR and water use efficiency (WUE) of S. krylovii (P <0.05); (2) light use efficiency (LUE) significantly correlated with PAR for Agropyron cristatum (P <0.05), but not for S. krylovii (P <0.05); (3) stomatal conductance (G_s) significantly correlated with relative humidity (RH) for both A. cristatum and S. krylovii, and there was a significant relationship between LUE and RH for A. cristatum (P <0.01); (4) stomatal conductance of A. cristatum was significantly correlated with vapor pressure deficit (VPD) (P <0.05); (5) there is obvious effect of soil water content (SWC) at 5 cm and 20 cm depths on the stomatal conductance of A. cristatum and S. krylovii. SWC at 5 cm depth and the stomatal conductance of A. cristatum and S. krylovii whose goodness of fit was 0.4192 and 0.3057 respectively, SWC at 20cm depth and the stomatal conductance of A. cristatum and S. krylovii whose goodness of fit was 0.3763 and 0.2546 respectively; and (6) WUE and LUE of plants can be used as good indicators of their environmental adaptability, A. cristatum was still able to maintain high WUE while SWC is very low, which might be identified as stress tolerance strategy. The LUE of S. krylovii was lower than A. cristatum throughout the growing season, but under abundant rainfall and higher SWC conditions, the LUE of S. krylovii was higher than that of A. cristatum, which might be identified as a competitive strategy.