Background: Nitrogen- and water-use efficiency (NUE and WUE) reflect the capacity of plants to take up and utilize resources in the environments. Although N deposition and drought are known to affect plant growth and persistence, it remains elusive how plants adjust NUE, WUE and their relationship to adapt to the concurrent N deposition and drought under the context of global change. We conducted a field experiment in a temperate grassland in Inner Mongolia, in which N addition (10 g m–2 yr−1), drought (reduced 66% precipitation during growing season) and their combination were manipulated, and we explored the responses of both instantaneous (NUEINST and WUEINST) and long-term (NUELT and WUELT) WUE and NUE for six common plant species (Leymus chinensis, Stipa baicalensis, Thermopsis lanceolata, Potentilla bifurca, Thalictrum squarrosum, Klasea centauroide). Results: Across all the six species, NUEINST decreased and WUEINST increased with both N addition and drought; NUELT decreased with both N addition and drought, while WUELT decreased with N addition and increased with drought. A significant interactive effect between N addition and drought was detected, in that, drought weakened the negative effect of N addition on WUELT and NUELT, and N addition weakened the negative effect of drought on NUELT, but enhanced the positive effect of drought on WUELT. As a consequence, drought caused a trade-off between NUE and WUE, and N addition brought forth positive correlation between NUE and WUE. Meanwhile, the relationship between NUE and WUE varied among the species of different functional groups. Conclusions: Our study demonstrated that NUE, WUE and their relationship play an important role in determining their responses and adaptability to changes in soil nitrogen and water availability induced by N deposition and drought. Our results shed light on the antagonistic, synergetic and neutral effects between nitrogen deposition and drought on resource use efficiency, and further clarified the different adaptability among species of different functional groups, which will conduce to a comprehensive understanding on the role of NUE and WUE in plant persistence and coexistence in grassland ecosystems. [ABSTRACT FROM AUTHOR]