Tree growth is generally considered to be temperature limited at upper elevation treelines, yet climate factors controlling tree growth at semiarid treelines are poorly understood. We explored the influence of climate on stem growth and stable isotopes for Polylepis tarapacana Philipi, the world’s highest elevation tree species, which is found only in the South American Altiplano. We developed tree-ring width index (RWI), oxygen (δ18O) and carbon (δ13C) chronologies for the last 60 years at four P. tarapacana stands located above 4400 m in elevation, along a 500 km latitude aridity gradient. Total annual precipitation decreased from 300 to 200 mm from the northern to the southern sites. We used RWI as a proxy of wood formation (carbon sink) and isotopic tree-ring signatures as proxies of leaf-level gas exchange processes (carbon source). We found distinct climatic conditions regulating carbon sink processes along the gradient. Current growing-season temperature regulated RWI at northern-wetter sites, while prior growing-season precipitation determined RWI at arid southern sites. This suggests that the relative importance of temperature to precipitation in regulating tree growth is driven by site water availability. By contrast, warm and dry growing seasons resulted in enriched tree-ring δ13C and δ18O at all study sites, suggesting that similar climate conditions control carbon-source processes along the gradient. Site-level δ13C and δ18O chronologies were significantly and positively related at all sites, with the strongest relationships among the southern drier stands. This indicates an overall regulation of intercellular carbon dioxide via stomatal conductance for the entire P. tarapacana network, with greater stomatal control when aridity increases. This manuscript also highlights a coupling (decoupling) between physiological processes at leaf level and wood formation as a function of similarities (differences) in their climatic sensitivity. This study contributes to a better understanding and prediction of the response of high-elevation Polylepis woodlands to rapid climate changes and projected drying in the Altiplano.