ABSTRACT Wild perennial sister species Medicago archiducis‐nicolai (rhizomatous/alpine) and M. ruthenica (non‐rhizomatous/xeric) constitute vital genetic resources for forage improvement. To decode the genomic basis of their contrasting trait and habitat adaptation, we generated chromosome‐scale genome assemblies, resequenced 128 individuals, profiled transcriptomes under cold/heat stress, and functionally validated causal alleles. We demonstrate that structural variations (SVs)—particularly gene duplications—are primary drivers of rhizome formation and alpine/xeric adaptation. Further, pervasive presence–absence SVs (PAVs) in noncoding regulatory regions underpin divergent allele‐specific expression governing rhizome development and stress responses. Crucially, these regulatory PAVs induce contrasting expression patterns during trait development and stress adaptation. Our findings reveal a dual mechanism whereby coding and regulatory SVs convergently orchestrate phenotypic innovation and ecological specialization in sister species, offering valuable genomic resources for legume evolution studies and alfalfa breeding.