Rainfall effects on plants depend on the distribution and dynamics of soil water and roots. This is of particular importance in arid ecosystems, characterized by long dry periods, where rooting depth and access to soil moisture deeply influence plant water relations and carbon fixation. Besides drought, plants of coastal semiarid ecosystems have to withstand highly saline soils. However, it is unclear how water availability and species tolerance to salinity may affect plants competitive abilities and vegetation structure in these communities. To explore these issues we focused on two woody species dominating a coastal semiarid dune community, Juniperus phoenicea and Pistacia lentiscus. We conducted physiological and stable isotope measurements in plants of both species growing isolated or in close association. Plant water sources were determined by coupling deuterium and ¹⁸O isotopic signatures of plant and soils at different depths along the dune profile. Soil conductivity was also determined. Finally, we performed a greenhouse experiment to study species tolerance to soil salinity. Results suggest that Juniperus is a shallow-rooted species that mainly uses rainfall water stored in the upper soil layers, while the deep-rooted Pistacia is able to use both fresh water of upper soils and salty groundwater from deep soils. Juniperus saplings have low salinity tolerance while Pistacia withstands values similar to those of groundwater. The partial overlap in plant water sources along with differences in rooting depth and salinity tolerance drive the outcome of the interaction between both species, where Juniperus is negatively affected and Pistacia has a competitive advantage.