AbstractClimate warming should result in hotter droughts of unprecedented severity in this century. Such droughts have been linked with massive tree mortality, and data suggest that warming interacts with drought to aggravate plant performance. Yet how forests will respond to hotter droughts remains unclear, as does the suite of mechanisms trees use to deal with hot droughts. We used an ecosystem‐scale manipulation of precipitation and temperature on piñon pine (Pinus edulis) and juniper (Juniperus monosperma) trees to investigate nitrogen (N) cycling‐induced mitigation processes related to hotter droughts. We found that while negative impacts on plant carbon and water balance are manifest after prolonged drought, performance reductions were not amplified by warmer temperatures. Rather, increased temperatures for 5 years stimulated soil N cycling under piñon trees and modified tree N allocation for both species, resulting in mitigation of hotter drought impacts on tree water and carbon functions. These findings suggest that adjustments in N cycling are likely after multi‐year warming conditions and that such changes may buffer reductions in tree performance during hotter droughts. The results highlight our incomplete understanding of trees' ability to acclimate to climate change, raising fundamental questions about the resistance potential of forests to long‐term, compound climatic stresses.