ABSTRACT Drought amplifies forest edge effects (EDE) by increasing microclimatic stress at edges (e.g., increasing temperature and reducing soil moisture), which heightens tree vulnerability to hydraulic failure. We assessed EDE's effects on hydraulic and functional traits of Qinghai spruce ( Picea crassifolia Kom.) across environmental gradients in the Qilian Mountains. Edge trees experienced lower hydraulic conductivity ( K s ) in both branches and roots during the drier year, suggesting that drought exacerbates EDE's negative effects on hydraulic efficiency. Percentage loss of hydraulic conductivity (PLC) did not differ between edge and interior trees, whereas water potential at 50% loss of hydraulic conductivity (P 50 ) was less negative at the edge, indicating reduced hydraulic safety. The lack of correlation between K max and P 50 suggests no trade‐off between hydraulic efficiency and safety. K s was correlated with wood density in branches but not in roots, presumably because soil buffers roots from environmental disturbance. At the edge, K s in branches declined and PLC increased with increasing crown base height. Notably, EDE's impact on hydraulic function varied with slope types and local moisture conditions. Our results indicate that drought exacerbates trees' ecological vulnerability at edges and emphasize EDE's role in regulating the hydraulic response of trees to climate change.