Forest dynamics will depend upon the physiological performance of individual tree species under more stressful conditions caused by climate change. In order to compare the idiosyncratic responses of Mediterranean tree species (Quercus faginea, Pinus nigra, Juniperus thurifera) coexisting in forests of central Spain, we evaluated the temporal changes in secondary growth (basal area increment; BAI) and intrinsic water-use efficiency (iWUE) during the last four decades, determined how coexisting species are responding to increases in atmospheric CO2 concentrations (C(a)) and drought stress, and assessed the relationship among iWUE and growth during climatically contrasting years. All species increased their iWUE (ca. +15 to +21%) between the 1970s and the 2000s. This increase was positively related to C(a) for J. thurifera and to higher C(a) and drought for Q. faginea and P. nigra. During climatically favourable years the study species either increased or maintained their growth at rising iWUE, suggesting a higher CO2 uptake. However, during unfavourable climatic years Q. faginea and especially P. nigra showed sharp declines in growth at enhanced iWUE, likely caused by a reduced stomatal conductance to save water under stressful dry conditions. In contrast, J. thurifera showed enhanced growth also during unfavourable years at increased iWUE, denoting a beneficial effect of C(a) even under climatically harsh conditions. Our results reveal significant inter-specific differences in growth driven by alternative physiological responses to increasing drought stress. Thus, forest composition in the Mediterranean region might be altered due to contrasting capacities of coexisting tree species to withstand increasingly stressful conditions.