Water-use efficiency (WUE) is a key plant functional trait that plays a central role in the global cycles of water and carbon. Although increasing precipitation may cause vegetation changes, few studies have explored the linkage between alteration in vegetation and WUE. Here, we analyzed the responses of leaf WUE, ecosystem carbon and water exchanges, ecosystem WUE, and plant community composition changes under normal conditions and also under extra 15% or 30% increases in annual precipitation in a temperate desert ecosystem of Xinjiang, China. We found that leaf WUE and ecosystem WUE showed inconsistent responses to increasing precipitation. Leaf WUE consistently decreased as precipitation increased. By contrast, the responses of the ecosystem WUE to increasing precipitation are different in different precipitation regimes: increasing by 33.9% in the wet year (i.e., the normal precipitation years) and decreasing by 4.1% in the dry year when the precipitation was about 30% less than that in the wet year. We systematically assessed the herbaceous community dynamics, community composition, and vegetation coverage to explain the responses of ecosystem WUE, and found that the between-year discrepancy in ecosystem WUE was consistent with the extent to which plant biomass was stimulated by the increase in precipitation. Although there was no change in the relative significance of ephemerals in the plant community, its greater overall plant biomass drove an increased ecosystem WUE under the conditions of increasing precipitation in 2011. However, the slight increase in plant biomass exerted no significant effect on ecosystem WUE in 2012. Our findings suggest that an alteration in the dominant species in this plant community can induce a shift in the carbon- and water-based economics of desert ecosystems.