Northern forests at the leading edge of their distributions may not show increased primary productivity under climate warming, being limited by climatic extremes such as drought. Looking beyond tree growth to underlying physiological mechanisms is fundamental for accurate predictions of forest responses to climate warming and drought stress. Within a 32-year genetic field trial, we analyze relative contributions of xylem plasticity and inferred stomatal response to drought tolerance in regional populations of a widespread conifer. Genetic adaptation leads to varying responses under drought. Trailing-edge tree populations produce fewer tracheids with thicker cell walls, characteristic of drought-tolerance. Stomatal response explains the moderate drought tolerance of tree populations in central areas of the species range. Growth loss of the northern population is linked to low stomatal responsiveness combined with the production of tracheids with thinner cell walls. Forests of the western boreal may therefore lack physiological adaptations necessary to tolerate drier conditions.