Vegetation on dunes and interdunes in hot, subtropical deserts is profoundly influenced by the temporal and spatial variation in availability of water and nutrients in the landscape. We hypothesised that water is more available to plants on the dunes but that nutrients are in greater concentrations on the interdunes in the Great Sandy Desert, Western Australia. During the course of 2 years, we examined water relations and photosynthesis of six dominant woody species throughout each season, in addition to foliar δ13C, δ15N and nutrient composition. In general, stomatal conductance (gs) was greater and leaf water potential (ΨL) less negative for dune species than for closely related species on the interdunes. The largest tree species in the landscape, Corymbia chippendalei ((D.J.Carr & S.G.M.Carr) K.D.Hill & L.A.S.Johnson), occurred only on the dunes, and maintained moderate gs values year round, ranging between 240 mmol H2O m–2 s–1 in the wet season and 160 mmol H2O m–2 s–1 in the middle of the dry season. It also displayed a relatively stable ΨL, between –0.3 and –0.5 MPa at predawn, and between –1.3 and –1.6 MPa at midday throughout the year, unlike the closely related species on the interdunes, Eucalyptus victrix (L.A.S.Johnson & K.D.Hill), which always displayed significantly lower ΨL values (0.2–1.1 MPa more negative). The two Grevillea species displayed ΨL values within a similar range as for C. chippendalei, while the Acacia species exhibited consistently more negative values, especially late in the dry season. Considerable reductions in gs occurred at this time for all species, except C. chippendalei. Rates of photosynthesis (A) followed the trends in gs, yet δ13C values varied little between related species in the dune and interdune habitats. Mineral nutrient concentrations in soil and foliage tended to be greater in the interdunes. Average N : P ratio in foliage was 28 : 1, indicating P was more limiting than N. Soil depth and texture, in conjunction with their effects on water availability and root growth, were considered to be the most influential factors affecting plant distribution in the Great Sandy Desert. It is concluded that dunes hold relatively more water than adjacent interdunes, sustaining more favourable water status in deep-rooted species from this habitat, further into the dry season. Conversely, species on the interdunes must be more desiccation tolerant and develop root systems with greater ability to penetrate conglomerated lateritic gravel layers in order to access water where and when it is available.