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The sequence of physiological events during drought strongly impacts plants' overall performance. Here, we synthesized the global data of stomatal and hydraulic traits in leaves and stems of 202 woody species to evaluate variations in the water potentials for key physiological events and their sequence along the climatic gradient. We found that the seasonal minimum water potential, turgor loss point, stomatal closure point, and leaf and stem xylem vulnerability to embolism were intercorrelated and decreased with aridity, indicating that water stress drives trait co‐selection. In xeric regions, the seasonal minimum water potential occurred at lower water potential than turgor loss point, and the subsequent stomatal closure delayed embolism formation. In mesic regions, however, the seasonal minimum water potential did not pose a threat to the physiological functions, and stomatal closure occurred even at slightly more negative water potential than embolism. Our study demonstrates that the sequence of water potentials for physiological dysfunctions of woody plants varies with aridity, that is, xeric species adopt a more conservative sequence to prevent severe tissue damage through tighter stomatal regulation (isohydric strategy) and higher embolism resistance, while mesic species adopt a riskier sequence via looser stomatal regulation (anisohydric strategy) to maximize carbon uptake at the cost of hydraulic safety. Integrating both aridity‐dependent sequence of water potentials for physiological dysfunctions and gap between these key traits into the hydraulic framework of process‐based vegetation models would improve the prediction of woody plants' responses to drought under global climate change. [ABSTRACT FROM AUTHOR]