It is essential to study the relationships of soil water and plants in desert areas for determining available soil water for plants, scheduling best irrigation management practices, deciding the suitable artificial vegetation density, and for selecting drought‐tolerating and water‐saving plants. In this study more than 100 lysimeters were installed to measure evapotranspiration and water‐use efficiency of five desert xerophyte species:Elaeagnus angustifolia, Hedysarum scoparium, Tamarix ramosissima, Caragana korshinskii, andHaloxylon ammodendron. The lysimeters were used to simulate evaporation of desert soils and transpiration of desert plant species with various groundwater depths and surface water supply conditions. The experimental data showed that the amount of transpiration, indexes of transpiration and evapotranspiration, and water‐use efficiency were different with different groundwater depths, plant species and plant ages. More than 80% of the total annual transpiration of the plants and more than 70% of the total annual evaporation from the desert soil occurred from June to September. Hence irrigation should be implemented during the 4 months in the experimental area. The measured data indicated that about 90% of the annual precipitation were evaporated from the bare soil; thus the choices of water‐saving plant species became critical. Our analyses suggest thatHalexylon ammodendronandCaragana korshinskiiare water‐saving as well as drought‐tolerating plant species, therefore, should be recommended for afforesting the desert area.