Background: Arbuscular mycorrhizal (AM) fungi increase seedling survival and performance through enhancement of nutrient and water uptake under stress conditions. Acacia etbaica, A. senegal and Boswellia papyrifera dominate large areas in African drylands where both moisture and nutrients are limited. Aims: We evaluated the effects of AM, drought and soil quality on carbon gain (growth), gas exchange and nutrient contents of seedlings of these three dry woodland species. Methods: We used a greenhouse experiment with a fully factorial design of two levels of AM, two levels of soil and four levels of water availability, on the carbon gain, gas exchange and nutrient content of seedlings of the three species. Results: AM symbiosis enhanced the acquisition of water and nutrients and increased gas exchange resulting in increased Acacia and Boswellia seedling biomass. The rapidly growing Acacia species (acquisitive strategy) showed larger mycorrhizal benefit at higher water availability. The slow-growing Boswellia (conservative strategy), in contrast, showed larger mycorrhizal benefit at lower water availability. Conclusions: This study showed that different species of dry woodlands benefit from AM in different ways depending on the resource use strategy under stress conditions. The inclusion of the mycorrhizal habit in trait-based approaches increases understanding of functional differences of coexisting tree species.