Phedimus aizoon L. is a drought-resistant Chinese herbal medicine and vegetable. However, its drought tolerant limit and the mechanism of drought tolerance are unknown, which restricts the promotion of water-saving cultivation of Phedimus aizoon L. in arid areas. To solve the above problem, we carried out a 30-day-long drought stress experiment in pots that presented different soil water contents and were divided into four groups: control check, 75-80% of the maximum water-holding capacity (MWHC); mild drought, 55-60%; moderate drought, 40-45%; and severe drought, 20-25%. The dynamic changes in both plant physiological indexes from 10 to 30 days and leaf anatomical structure on the 30th day of stress were recorded. The results show that Phedimus aizoon L. grew normally under mild drought stress for 30 days, but the growth of the plants became inhibited after 20 days of severe drought and after 30 days of moderate drought. At the same time, Phedimus aizoon L. physiologically responded to cope with drought stress: the growth of the root system accelerated, the waxy layer of the leaves thickened, and the dark reactions of the plants transformed from those of the C3 cycle to CAM. The activity of antioxidant enzymes (SOD, POD and CAT) continuously increased to alleviate the damage caused by drought stress. To ensure the relative stability of the osmotic potential, the contents of osmoregulatory substances such as proline, soluble sugars, soluble protein and trehalose increased correspondingly. Although Phedimus aizoon L. has strong drought stress resistance, our experimental results show that the soil available water content should not be less than 27% during cultivation.