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Pathogenic diseases frequently occur in drought‐stressed trees. However, their contribution to the process of drought‐induced mortality is poorly understood. We combined drought and stem inoculation treatments to study the physiological processes leading to drought‐induced mortality in Norway spruce (Picea abies) and Scots pine (Pinus sylvestris) saplings infected with Heterobasidion annosum s.s. We analysed the saplings' water status, gas exchange, nonstructural carbohydrates (NSCs) and defence responses, and how they related to mortality. Saplings were followed for two growing seasons, including an artificially induced 3‐month dormancy period. The combined drought and pathogen treatment significantly increased spruce mortality; however, no interaction between these stressors was observed in pine, although individually each stressor caused mortality. Our results suggest that pathogen infection decreased carbon reserves in spruce, reducing the capacity of saplings to cope with drought, resulting in increased mortality rates. Defoliation, relative water content and the starch concentration of needles were predictors of mortality in both species under drought and pathogen infection. Infection and drought stress create conflicting needs for carbon to compartmentalize the pathogen and to avoid turgor loss, respectively. Heterobasidion annosum reduces the functional sapwood area and shifts NSC allocation patterns, reducing the capacity of trees to cope with drought. Summary Statement: Interrelated decreases in carbon and water pools drive drought‐ and pathogen‐induced mortality mechanisms in Picea abies infected by the pathogen Heterobasidion annosum. The pathogen reduces the functional sapwood area and induces a defence response, reducing available carbon to face drought impacts. [ABSTRACT FROM AUTHOR]