Technical Abstract: Kochia prostrata is an important shrub that has shown a remarkable ability to compete with the invasive annual grass, Bromus tectorum. We conducted experiments in a salt desert community in the Great Basin to evaluate physiological mechanisms that may be responsible for its success in these harsh environments. Leaf gas exchange (photosynthesis, conductance, and transpiration), xylem water potential, and delta 13C values were measured in spring/summer for two years. In addition, we monitored monthly soil water content with TDR probes in monospecific patches of K. prostrata and B. tectorum. Soil water contents in K. prostrata and B. tectorum patches suggest that both of these species use shallow water resources early in the spring. Pre-dawn leaf water potentials for B. tectorum drastically declined until plant senescence in early May. In contrast, pre-dawn leaf water potentials for K. prostrata did not significantly decline until July. Delta 13C values for leaves of K. prostrata consistently averaged -16 per mil, and maintained high photosynthetic rates at midday with low stomatal conductance, resulting in restricted outward diffusion of 13CO2. These results suggest the K. prostrata has the capacity to compete with B. tectorum for early season soil water and persist in harsh environments by maintaining photosynthesis, even when stomatal conductance is diminished.