Plant functional traits can respond to habitat variation and also determine ecosystem functions. Therefore, studying the relationship between plant functional traits and their variation along soil available water gradients is of great significance for understanding the relationship between plant carbon and water metabolism and the physiological and ecological mechanism underlying the maintenance of water balance under different water conditions. The study was conducted using a typical semi-arid loess watershed grassland in Dingxi, Gansu Province, China, where the responses of community functional traits to soil available water at 30 representative grassland sites were analyzed. (1) All seven of the plant functional traits examined (leaf width, leaf length, leaf area, specific leaf area, plant height, leaf thickness, and leaf dry matter content), except leaf width, were significantly correlated with soil available water, which could be identified as the response of grassland to soil water at community level.(2) Grassland communities can adapt to the decreasing soil available water by reducing plant height, leaf length, leaf area, and specific leaf area and increasing leaf thickness and leaf dry matter content. In the present study, the leaf dry matter content exhibited the greatest explanation capacity and was the optimal response trait of soil water. (3) With the exception of leaf thickness and leaf length, all other pairs of the functional traits were significantly correlated. This indicates that the functional traits of grassland communities have either formed a functional trait combination that is a mutual trade-off or have synergistically changed along the soil water gradient.