Temperature and water are critical drivers of alpine plant communities. However, uncertainties persist regarding their combined effects, particular in alpine watersheds experiencing rapid changes in temperature and hydrological process over the past decades. In this study, we investigated how hydrological conditions mediate alpine plant communities’ response to temperature changes at the watershed scale. Our study showed that in water-deficient grasslands, an unimodal response of species richness (p < 0.05) and a linear decrease in coverage (p < 0.001), but non-significant changes in productivity (p > 0.05) were revealed with increasing temperature. These asynchronized changes in coverage and productivity are ascribed to plant adaptation to water stress. Plant communities shifted from low and dense cushions to taller and sparser vegetations, while dominant species changed from small and shallow-rooted species (Kobresia pygmaea) to large and deep-rooted (Potentilla bifurca) ones. In contrast, riverine wetlands showed no significant changes (p > 0.05) in community structure or productivity, likely due to their high hydrological connectivity that promoted propagule dispersal and soil environment homogenisation. Moreover, temperature and its mediated soil properties strongly influenced plant community structure in grasslands and transitional zones (R2 = 0.69 and 0.73 in Structural Equation Modeling, respectively) but not in wetlands (R2 = 0.25 in Structural Equation Modeling). This also indicates the prevailing of homogenization of habitat and species pool via strong hydrological dispersal in wetland community assembly. Overall, this study highlights that complex temperature-water interactions shape alpine plant communities at the watershed scale, which is unlikely to be understood from site-scale warming experiments focusing on a single vegetation. Future studies in these mountainous areas should consider the spatial heterogeneity induced by their complex vegetation types and hydrological conditions, while understanding the effects of intensifying stochastic processes on alpine ecosystems experiencing drastic hydrological changes.