Arbuscular mycorrhizal fungi (AMF) is an important and common type of mycorrhizal fungi, which is widely distributed in soils worldwide. AMF can develop a symbiotic relationship with the roots of most terrestrial plants and can improve the resistance of host plants to drought when under drought stress conditions. Based on our previous studies, we found that AMF had positive roles on the vegetation restoration of native plants in the arid valley of Minjiang River, and its role was even more significant in the driest core area of the dry valley. However, the underlying mechanisms of how AMF affects the growth of its native host plant under drought stress conditions remains unclear. To investigate the effects of AMF on its native plant, we designed a full factorial and completely random pot experiment in a greenhouse. We attempted to quantitatively clarify the roles of AMF in the seedlings by testing the symbiotic relationship between Bauhinia faberi var. microphylla seedlings (B. faberi) and one dominant arbuscular mycorrhizal fungi (Funneliformis mosseae, FM) under three drought stress conditions. Continuous drought was induced by watering seedlings at one-day intervals with distilled water over four months with three water content levels. These were low, middle, and high, represented, respectively, by 40%, 60%, and 80% of the field capacity. At the end of the experiment, we measured the maximum photosynthetic rate, proline content, biomass production and carbon partitioning, nutrient content, inoculation rate, and mycorrhizal growth response (MGR) before the seedlings were harvested. One- and two-way ANOVA were used for statistical analysis. The results showed that FM could colonize the roots of B. faberi seedlings well, with the average proportion of mycorrhizal colonization being as high as 89%-97% under drought stress conditions. The maximum photosynthetic rate and water use efficiency of the inoculated seedlings were enhanced as the soil water content increased from low to medium and high levels. However, the proline content in leaves decreased. Inoculation of FM can significantly promote an increase in the height, leaf number, leaf area, root length, root area, and biomass of seedlings, and P concentration both in shoots and in roots, which indicated that FM could benefit the growth of its host plant. Specifically, B. faberi seedlings had the highest P concentration under the medium water treatment (60% field capacity) compared to the other treatments. Moreover, inoculation significantly affected the biomass allocation of seedlings to the shoot and root and affected P allocation of seedlings when under the most severe drought stress. R/S of mycorrhizal seedlings was significantly higher than that of non-mycorrhizal seedlings under the same water stress conditions. R/S of mycorrhizal seedlings was significantly higher under the low water treatment, which means that seedlings allocated more carbohydrates to the root than to the shoot. Moreover, the interaction between AMF and soil water condition significantly affected leaf biomass, total biomass, and shoot-N content. We found that the mycorrhizal growth response of FM was remarkable and that FM significantly promoted the growth of B. faberi seedlings under drought stress conditions, which provides a theoretical basis for arid valley vegetation restoration practice.