Haloxylon ammodendron (saxaul, a yellow-flowered shrub) is a keystone species in China's Gurbantunggut Desert. The population of the species has degenerated in low-lying areas and small dunes (height <5m), while nearby in large dunes (height >10m) the plants grow normally. In this study we investigated the spatial distribution of dead plants, the ages of living and dead plants, and the condition of the shallow lateral roots of H. ammodendron, as well as the depth of groundwater and the physical and chemical properties of the soil in low-lying areas, small dunes, and large dunes. Dead plants showed a highly significant cluster distribution in 15 out of the 19 observation plots. We found that intraspecific self-thinning was not the cause of the decline of H. ammodendron: there were dead plants in all age groups, suggesting no relationship between population age and degeneration. The relationship between the survival index of H. ammodendron populations and the groundwater level was significantly negative, indicating that groundwater has a profound effect on the viability of the populations; however, the relationship was reversed for shallow water levels, indicating that water tables need to be maintained within a certain appropriate range for the species to thrive. We found a significant negative relationship between the electrical conductivity of soil (at depths from 0-30cm to 90-120cm) and the numbers of H. ammodendron seedlings (height <40cm), with greater electrical conductivity in the low-lying areas and small dunes where the species population is degraded. Infiltration of groundwater in degraded areas was slower and there were fewer lateral roots at depths of 0-90 cm in the degenerated areas, compared with the large dunes. The numbers of lateral roots were inversely correlated with soil electrical conductivity, significantly so at depths of 0-30cm and 60-90cm. The numbers of lateral roots were positively correlated with soil saturated hydraulic conductivity at depths of 0-30cm and 30-60cm. In summary, the slow infiltration of groundwater, excessive soil salinity, and the resultant reduction in the distribution of lateral roots and the depth of the groundwater, have all severely restricted the availability of water to H. ammodendron in the degraded area. Hence, a great number of H. ammodendron plants have perished in the affected areas due to water shortage. The renewal of populations is also restricted by excessive soil salinity, so that recruitment of H. ammodendron seedlings is also low. These factors lead to the conclusion that natural regeneration of the affected areas is unlikely.