By increasing water use efficiency and carbon assimilation, increasing atmospheric CO2 concentrations could potentially improve plant productivity and growth at high salinities. To assess the effect of elevated CO2 on the salinity response of a woody halophyte, we grew seedlings of the mangrove Avicennia germinans under a combination of five salinity treatments [from 5 to 65 parts per thousand (ppt)] and three CO2 concentrations (280, 400 and 800 ppm). We measured survivorship, growth rate, photosynthetic gas exchange, root architecture and foliar nutrient and ion concentrations. The salinity optima for growth shifted higher with increasing concentrations of CO2, from 0 ppt at 280 ppm to 35 ppt at 800 ppm. At optimal salinity conditions, carbon assimilation rates were significantly higher under elevated CO2 concentrations. However, at salinities above the salinity optima, salinity had an expected negative effect on mangrove growth and carbon assimilation, which was not alleviated by elevated CO2, despite a significant improvement in photosynthetic water use efficiency. This is likely due to non‐stomatal limitations to growth at high salinities, as indicated by our measurements of foliar ion concentrations that show a displacement of K+ by Na+ at elevated salinities that is not affected by CO2. The observed shift in the optimal salinity for growth with increasing CO2 concentrations changes the fundamental niche of this species and could have significant effects on future mangrove distribution patterns and interspecific interactions.