Groundwater is the most important water source for plant growth and vegetation survival in arid desert area, which directly affects the composition, distribution and development of desert vegetation. Desert riparian forest is a valuable natural forest resource in extreme arid region, and also a distinctive ecosystem with the most active life phenomena, high biodiversity and primary productivity. The largest area of desert riparian forest is distributed in the Tarim Basin, northwest China. It protects biodiversity and desert ecosystem stability, and serves as a natural barrier to safeguard the ecological security of oasis. Since the 1950s, a large deal of land has been reclaimed and the water resources have been excessively utilized in the area. It has resulted in a reduction in the groundwater level, weak vegetation growth, and high desert plant mortality, which has affected the sustainable development of agriculture and the economy of oasis. So, it is urgent to restore the degraded desert riparian forest ecosystem. To establish a scientific basis for protection, sustainable management and ecological restoration of natural forest in arid areas, understanding the spatial variations of soil water availability and biodiversity in desert riparian forests, as well as their interrelationships, is critical for protecting, managing and/or restoring the natural forests on drylands. We surveyed 22 riparian forest sites in the Tarim Basin to examine how soil moisture and species diversity covary along a groundwater depth gradient (GWD) from 1.2m to 5.6m. Results showed that the number of species significantly decreased, community structure became simplified and vegetation degraded as soil moisture reduced and GWD increased. The vegetation degraded in the following sequence:herb and shrub species with shallow roots were early losers in face of water shortage at greater GWD sites, and only tree and shrub species with high drought-tolerance persisted at the extreme of the GWD gradient. There was a significant linear correlation between soil moisture and GWD, and the strength of correlation between GWD and soil moisture was significantly higher than that between GWD and species diversity. Soil moisture and species richness, species diversity index showed a significant linear declining tendency with increasing GWD, while species evenness index decreased at a relatively low rate (i.e., gentle slope). In the meantime, the net negative effect of GWD increases on soil moisture was higher than on species diversity, suggesting a key of GWD in determining the spatial variability of species diversity and soil moisture. Linear piece-wise quantile regression was employed to determine the inflection points of trade-off between species diversity and soil moisture along the GWD gradient. It revealed an obvious trend of trade-off along the GWD gradient. The inflection point of trade-off was detected at a GWD of about 4.5m. Where GWD was less than 4.5m, the soil moisture and species diversity changed at the same rate and exhibited a synergistic relationship. Alternatively, with GWD>4.5m, the trade-off was strengthened obviously and the relative returns of soil moisture decreased sharply. So, species diversity was maintained at the cost of soil water consumption, and the species diversity reduced through a feedback regulation. To sum up, the critical GWD for maintaining species diversity and ecosystem functions of desert riparian forests is about 4.5m, which provides a scientific guideline for the conservation of desert riparian forests and the implementation of ecological water conveyance project in the Tarim Basin.