ABSTRACT Species‐specific regulation of water fluxes and storage in the xylem are important drivers of drought tolerance. However, differences may occur along the radial profile of the xylem, potentially modifying drought responses. We investigated sap flow ( J s ) and stem water content (WC stem ) at two xylem depths, and diurnal stem radius variations of Quercus petraea and Abies alba in a mature forest stand in SW‐Germany during 2 years of contrasting environmental conditions. In response to drought, Q. petraea maintained high J s , albeit with a dynamic shift of J s between inner and outer xylem vessels: Under high vapour pressure deficit (VPD), J s in the inner xylem exceeded J s in the outer xylem during the day, despite its ring‐porous xylem anatomy. From dusk to dawn and at low VPD, this pattern was reversed with higher J s in the outer xylem compared to the inner xylem. Since WC stem in the outer xylem reached a plateau concurrently to the shift, and tree water deficits could be refilled most nights in Q. petraea , dynamic reduction of J s in the outer xylem likely prevented excessive depletion of stem water reserves. In contrast, A. alba strictly decreased J s by up to 80% in a dry compared to a wet year, with more pronounced reductions in the inner xylem. In summary, our study demonstrated that a dynamic shift in regulation of J s between different xylem depths and its link to stem water reserves might be an understudied trait of temperate trees and should be incorporated into future studies.