Groundwater is an important water source for phreatophytic shrubs in arid desert areas. In order to understand the impacts of groundwater depth on functional traits of phreatophytic shrubs, two groups of groundwater levels (2 and 3.5 m) were set up using lysimeter with automatic water replenishing instrument. We measured hydraulic traits, gas exchange characteristics, and root morphological parameters of young Haloxylon ammodendron during the growing season. The results showed that predawn assimilating branch water potential, osmotic potential at full turgor, and root length ratio of young H. ammodendron in the groundwater depth of 3.5 m were lower by 48.2%, 41.5% and 56.7% than that under groundwater depth of 2 m, respectively, while maximum net photosynthetic rate of late growing season, root volume, specific root length and specific root area of fine root were 75.7%, 41.0%, 273.7% and 67.7% higher, respectively. Midday water potential and water content of assimilating branch tended to decrease first in the early growing season and then increase in the late growing season. Root distribution of young H. ammodendron along soil profile showed a significant positive correlation between the average root diameter and soil depth, while the proportion of fine root surface area showed a significant negative correlation with soil depth at both groundwater levels. There was synergy of aboveground assimilating branch hydraulic traits and photosynthetic capacity with belowground root morphological traits in young H. ammodendron. Under the condition of increasing groundwater depth, young H. ammodendron adopted the ecological strategies of reducing predawn assimilating branch water potential and osmotic potential at full turgor, and increasing root diameter and length to enhance water deficit tolerance and expanding the area of water uptake to sustain their survival.