In the present study the influences of different arbuscular mycorrhizal (AM) fungal species on the formation of water-stable soil aggregates and growth of Medicago sativa L. were examined under simulated drought stresses in a compartmented cultivation system. In addition to observations on mycorrhizal colonization, plant growth responses and soil aggregates, we also monitored soil chemo-physical properties and plant physiological responses for uncovering the mechanisms underlying mycorrhizal functions. The experimental results indicated that, root colonization by Glomus intraradices was significantly higher than those by the other two fungal species, Acaulospora scrobiculata and Diversispora spurcum irrespective to soil water conditions. Under well watered conditions, all three AM fungal species significantly increased plant biomass and P concentrations; while drought stresses significantly inhibited plant growth and mycorrhizal colonization. There were no observable mycorrhizal effects on plant growth under drought stresses, meanwhile, inoculation with D. spurcum even reduced plant biomes, and only G. intraradices increased plant P concentrations. As for mycorrhizal effects on soil structure, AM fungi mainly affected water stable soil aggregates with particle size > 2 mm, and G. intraradices exhibited most prominent effects. Consistently, G. intraradices significantly increased the contents of glomalin-related soil proteins in the hyphal compartment of the cultivation system. The study clearly demonstrated the positive influences of AM fungi on formation of large soil aggregates and plant drought tolerance, while there was large variation among different AM fungal species. To make sure of successful ecological restoration of degraded ecosystem with assistance of mycorrhizal fungi, selection of tolerant AM fungal strains should be fully considered. At present, further study is still necessary to reveal the biological and molecular basis for the differences in stress tolerance of different AM fungal species.