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Leaf hydraulic traits are considered the key determinants of gas exchange and therefore affect species distributions along environmental gradients, but the patterns of leaf hydraulic traits and their associations with gas exchange across altitudinal gradients remain largely unknown. Here, we measured leaf hydraulic traits, gas exchange, leaf anatomical traits and plant size traits in two dominant alpine shrubs (Caragana jubata and Salix gilashanica) across an altitudinal gradient from 3100 to 3700 m. The findings indicated that with increasing altitude, both shrub species exhibited an increase in leaf hydraulic safety (more negative Kleaf P50), a decrease in leaf hydraulic efficiency (Kleaf‐max) and an increase in intrinsic water use efficiency (WUEi), thus allowing them to adapt to higher altitude habitats. The more negative Kleaf P50 was associated with a greater ratio of major to minor vein density (VLAmaj/VLAmin), the lower Kleaf‐max was associated with a lower minor vein density (VLAmin) and greater increase in WUEi arose from the small decrease in the photosynthetic rate relative to the stomatal conductance. However, C. jubata was consistent with the ‘hydraulic safety strategy’ with a great decrease in Kleaf P50, a small decrease in Kleaf‐max and a small increase in WUEi along with decreasing plant height and leaf area with increasing altitude. Whereas S. gilashanica was consistent with the ‘photosynthetic efficiency strategy’ with a small decrease in Kleaf P50, a greater decrease in Kleaf‐max and a greater increase in WUEi along with an increasing plant height and unchanged leaf area with increasing altitude. Overall, these findings provide new insights to improve understanding how shift in leaf hydraulic traits and their associations with gas exchange and plant size allow plants to adapt to high‐altitude habitats. Read the free Plain Language Summary for this article on the Journal blog. [ABSTRACT FROM AUTHOR]