Water is the most important factor controlling plant growth, primary production, and ecosystem stability in arid and semi-arid grasslands. Here we conducted a 2-year field study to explore the contribution of winter half-year (i.e. October through April) and summer precipitation (May through September) to the growth of coexisting plant species in typical steppe ecosystems of Inner Mongolia, China. Hydrogen stable isotope ratios of soil water and stem water of dominant plant species, soil moisture, and plant water potential were measured at three steppe communities dominated by Stipa grandis, Caragana microphylla, and Leymus chinensis, respectively. The fraction of water from winter half-year precipitation was an important water source, contributing 45% to plant total water uptake in a dry summer after a wet winter period (2005) and 15% in a summer where subsoil moisture had been exploited in the previous year (2006). At species level, Caragana microphylla exhibited a complete access to deep soil water, which is recharged by winter precipitation, while Cleistogenes squarrosa completely depended on summer rains. Leymus chinensis, Agropyron cristatum, and Stipa grandis showed a resource-dependent water use strategy, utilizing deep soil water when it was well available and shifting to rain water when subsoil water had been exploited. Our findings indicate that differentiation of water sources among plants improves use of available soil water and lessens the interspecific competition for water in these semi-arid ecosystems. The niche complementarity in water sources among coexisting species is likely to be the potential mechanism for high diversity communities with both high productivity and high resilience to droughts.