Climate change is often associated with increasing vapor pressure deficit (VPD) and decreasing soil moisture (SM). While atmospheric and soil drying often co-occurs, their differential effects on plant functioning and productivity remain uncertain. In a field study in a mature semiarid Aleppo pine forest, we aimed to elaborate the divergent effects and their underlying mechanisms of soil and atmospheric drought, based on continuous, in situ, measurements of branch gas exchange with automated chambers. To do so, we compared the response of control trees exposed to combined soil-atmosphere drought (low SM, high VPD) with the response of trees released from soil dryness (high SM) but subjected to atmospheric drought (high VPD). During the drying period, the rates of transpiration, net photosynthesis, and stomatal conductance decreased in the low-SM trees, but greatly increased in high-SM trees. In response to increasing VPD (to a maximum of 7 kPa), E and gbr decreased in the control trees, but increased in irrigated trees. These observations were consistent with predictions based on a simple plant hydraulic model showing that plant water potential is a good predictor of gbr response to increasing VPD. The results demonstrated that trees exhibit the capacity for a fast opportunistic response to increasing soil moisture. In turn, the elimination of the supply-side drought and the plant hydraulic regulation eliminates the effect of atmospheric demand (VPD) as a stressor on canopy gas exchange.