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Summary: Clarifying the coordination of leaf hydraulic traits with gas exchange across closely‐related species adapted to varying rainfall can provide insights into plant habitat distribution and drought adaptation.The leaf hydraulic conductance (Kleaf), stomatal conductance (gs), net assimilation (A), vein embolism and abscisic acid (ABA) concentration during dehydration were quantified, as well as pressure–volume curve traits and vein anatomy in 10 Caragana species adapted to a range of mean annual precipitation (MAP) conditions and growing in a common garden.We found a positive correlation between Ψleaf at 50% loss of Kleaf (KleafP50) and maximum Kleaf (Kleaf‐max) across species. Species from low‐MAP environments exhibited more negative KleafP50 and turgor loss point, and higher Kleaf‐max and leaf‐specific capacity at full turgor, along with higher vein density and midrib xylem per leaf area, and a higher ratio of Kleaf‐max : maximum gs. Tighter stomatal control mediated by higher ABA accumulation during dehydration in these species resulted in an increase in hydraulic safety and intrinsic water use efficiency (WUEi) during drought.Our results suggest that high hydraulic safety and efficiency combined with greater stomatal sensitivity triggered by ABA production and leading to greater WUEi provides drought tolerance in Caragana species adapted to low‐MAP environments. [ABSTRACT FROM AUTHOR]