Boreal peatland forests have relatively low species diversity and thus impacts of climate change on one or more dominant species could shift ecosystem function. Despite abundant soil water availability, shallowly rooted vascular plants within peatlands may not be able to meet foliar demand for water under drought or heat events that increase vapor pressure deficits while reducing near surface water availability, although concurrent increases in atmospheric CO₂ could buffer resultant hydraulic stress. We assessed plant water relations of co‐occurring shrub (primarily Rhododendron groenlandicum and Chamaedaphne calyculata) and tree (Picea mariana and Larix laricina) species prior to, and in response to whole ecosystem warming (0 to +9°C) and elevated CO₂ using 12.8‐m diameter open‐top enclosures installed within an ombrotrophic bog. Water relations (water potential [Ψ], turgor loss point, foliar and root hydraulic conductivity) were assessed prior to treatment initiation, then Ψ and peak sap flow (trees only) assessed after 1 or 2 years of treatments. Under the higher temperature treatments, L. laricina Ψ exceeded its turgor loss point, increased its peak sap flow, and was not able to recover Ψ overnight. In contrast, P. mariana operated below its turgor loss point and maintained constant Ψ and sap flow across warming treatments. Similarly, C. calyculata Ψ stress increased with temperature while R. groenlandicum Ψ remained at pretreatment levels. The more anisohydric behavior of L. laricina and C. calyculata may provide greater net C uptake with warming, while the more conservative P. mariana and R. groenlandicum maintained greater hydraulic safety. These latter species also responded to elevated CO₂ by reduced Ψ stress, which may also help limit hydraulic failure during periods of extreme drought or heat in the future. Along with Sphagnum moss, the species‐specific responses of peatland vascular communities to drier or hotter conditions will shape boreal peatland composition and function in the future.