Increasing aridity is a major threat to forests worldwide. Understanding tree functional constraints under drought and their impacts on resilience and mortality among species is crucial to assess global change on forests. We analyzed the long-term drought and atmospheric CO₂ responses in three Mediterranean co-occurring species with differing drought tolerances (Pinus pinaster < Pinus pinea < Juniperus oxycedrus). In this mixed forest, P. pinaster exhibited widespread mortality and mistletoe infection, P. pinea showed scattered mortality, and J. oxycedrus showed no decline. Using tree-ring data (1978–2016), we compared intrinsic water-use efficiency (iWUE) and xylem hydraulic traits in healthy and non-healthy individuals of both pine species and healthy junipers. Healthy P. pinaster trees produced a more hydraulically efficient xylem, with wider lumen tracheids, than non-healthy trees, whereas P. pinea showed no anatomical differences between health status. Healthy P. pinaster displayed greater anatomical plasticity, adjusting hydraulic conductivity and cell-wall thickness to water availability. Despite small differences in average iWUE, the response of iWUE to rising CO₂ and drought differed between species and health status. J. oxycedrus and P. pinea showed steady iWUE increases, but P. pinea experienced periods of stagnation following an extreme drought, later recovering regardless of health status. In contrast, iWUE in P. pinaster plateaued for over 20 years after a drought-inducing drought, particularly in non-healthy, mistletoe-infected trees. Differences in iWUE response to CO₂ and anatomical plasticity to drought may explain the contrasting mortality patterns among these coniferous species. Our results suggest a long-term decline spiral in P. pinaster induced by low hydraulic efficiency in drought-induced defoliated trees and limited physiological response to rising CO₂ and drought. Increasing drought stress makes pine recovery increasingly unlikely.