Many willow species (genus: Salix) co-occur within habitats (α-diversity) and across the landscape (β-diversity) throughout North America. This high diversity is challenging to explain because closely related species often share similar functional traits and thus experience heightened competition and shared pest and pathogen susceptibility. To investigate whether traits related to drought survival are important in maintaining diversity, we conducted an experimental dry-down on six willow species in a greenhouse. We compared species' growth rates, stem and leaf hydraulics, leaf function and dieback and examined potential associations between their drought responses and habitat affinities. Habitat affinities were characterized based on species occurrence in randomly established field plots in central Minnesota. Overall, species that occur in drier, more seasonally variable habitats tended to have higher water-use efficiency, and faster growth rates than species from wetter habitats. However, the greatest difference in drought survival strategies was found between two species with similar habitat affinities. We conclude that differences in willow species could be important in both driving habitat differentiation and permitting temporal differentiation in resource utilization within habitats. Therefore, species' water-use strategies could be important in maintaining both α- and β-diversity across the landscape.