Abstract Facilitating species persistence under climate change is a pressing issue. Refugia, places where the impacts of climate change may be less severe, can constitute the only option for in situ persistence for many taxa. However, refugia will still experience some impacts of climate change. Management approaches that utilize the buffering provided by climate‐change refugia, while recognizing their vulnerability, are needed. This increasingly applies to forests impacted by drought‐induced dieback, threatening forest ecosystems globally. We established a gradient from good (putative microrefugia) to poor canopy health for a unique population of Eucalyptus macrorhyncha in South Australia. Microrefugia were identified in locations that received less solar radiation and were cooler and moister than other habitats. Physiological measurements (percent loss of conductivity) of trees indicate that microrefugia are already impacted by water stress during droughts, but less than more exposed habitats. Strong regeneration was observed in habitats with canopy dieback between 25% and 70%. Therefore, in situ persistence and recovery of populations should be feasible but may require interventions during periods of acute stress. Watering of targeted microrefugia and selected adjacent areas of high regeneration during extreme heatwaves and droughts could prevent hydraulic damage that triggers canopy defoliation and maintain a buffer around selected microrefugia.