The phreatophytic tree species Populus euphratica Oliv. (Euphrates poplar) forms riparian (tugai) forests along the Tarim River at the northern and eastern fringe of the hyper-arid Taklamakan Desert (Xinjiang province, NW China). These forests are threatened by decreasing groundwater levels due to excessive withdrawal of water for agricultural irrigation. At three plots each at the middle (Yingbazar) and the lower reaches (Arghan) of the Tarim River, we investigated the long-term effects of different water supply due to different distances to the groundwater (from 2 to 12 m) or to additional supply with water from reservoirs, which is being conveyed to the Tarim River's lower reaches since 2000 to conserve and restore the poplar forests. We conducted tree-ring analyses for the time period 1946–2011 and quantified the water use at the tree (E_tree) and the stand level (E_stand) using the Granier method. For the last four decades of investigation, the average tree-ring width and basal area increment (BAI), the cumulative E_tree (May–August) and E_stand were significantly higher on the plots with the largest water supply than on the plots with the largest distance to the groundwater. However, the maximum values of xylem sap flow density and E_tree values averaged for the vegetation period did not differ significantly among plots and between sites. These transpiration values and the relatively large BAI even at a large distance to the groundwater indicate that—in contrast to previous studies—Euphrates poplars can grow vigorously even at a groundwater depth of up to 12 m. Supply with additional water resulted in a marked increase in BAI. Lower E_stand at lower water supply can be explained with a sparser stand density. Interannual fluctuations in the water supply resulted in distinct alterations in BAI in trees that grow at a short distance to the water table or are supplied with additional water. Against the background of limited water availability in the region, we recommend concentrating the conveyance of additional water to forest stands with a short distance to groundwater to keep those forests fully functional and to maintain their ability to regenerate.