The intricate dance between soil moisture (SM) and vapor pressure deficit (VPD) is a pivotal aspect of the carbon-water cycle in terrestrial ecosystems, with profound implications for global climate regulation and biodiversity conservation. However, the precise mechanisms by which these two drought indicators—representing soil and atmospheric drought, respectively—interact and influence ecosystem processes such as water use efficiency (WUE) and photosynthetic efficiency (EPE) remain elusive, especially in regions like Central Asia that are highly susceptible to climatic variations. To unravel these complexities, we conducted a comprehensive investigation that delves into the individual and combined effects of SM and VPD on WUE and EPE across various ecological gradients. Our research builds on the foundational understanding that drought stress, whether induced by low soil moisture or high atmospheric evaporative demand, can significantly alter plant physiology and ecosystem functioning. By employing sophisticated statistical methods, including bivariate correlation analysis and advanced decoupling techniques, we aimed to disentangle the independent and interactive impacts of SM and VPD on WUE and EPE. This approach enabled us to gain a nuanced perspective on how these factors influence key ecosystem metrics and their potential to regulate carbon sequestration and water balance. Our findings underscore the paramount importance of considering both soil and atmospheric drought when assessing the resilience of terrestrial ecosystems to climate change. Specifically, we discovered that VPD is the primary driver of WUE variations, highlighting the crucial role of atmospheric conditions in shaping plant water-saving strategies. In contrast, SM emerged as the dominant regulator of EPE, emphasizing the necessity of maintaining optimal soil moisture levels to sustain efficient photosynthesis and overall ecosystem productivity. This finding reinforces the critical role of soil moisture in supporting ecosystem functioning and underscores the urgency of managing soil water resources sustainably. Moreover, our analysis revealed significant spatial heterogeneity in the sensitivity of WUE and EPE to drought stress. Across different altitudinal, latitudinal, and climatic gradients, we observed distinct patterns of response, indicating that the impacts of soil and atmospheric drought are highly context-specific. This discovery underscores the importance of tailoring conservation and management strategies to the unique characteristics and vulnerabilities of individual ecosystems. Beyond the immediate implications for Central Asia, our findings have broader implications for understanding the global carbon-water cycle and its sensitivity to climate change. By elucidating the mechanisms underlying the response of WUE and EPE to drought stress, we provide valuable insights into the potential feedbacks between terrestrial ecosystems and the climate system. These insights can inform the development of policies aimed at mitigating the impacts of climate change on biodiversity, ecosystem services, and human well-being. In conclusion, our study offers a comprehensive and nuanced perspective on the intricate relationships between soil moisture, vapor pressure deficit, and key ecosystem metrics such as WUE and EPE. By disentangling the independent and interactive effects of these factors, we have shed new light on the complexities of the carbon-water cycle and its vulnerability to drought stress. Our findings underscore the importance of considering both soil and atmospheric drought in ecosystem management and conservation efforts, and highlight the urgent need for tailored strategies that address the unique challenges faced by diverse ecosystems in the face of ongoing climate change.