[Background] The rapid development of urbanization have put forward higher requirements on the country road greening and landscape. But the high latitudes, low temperature and drought problemrestrain the growth and breeding of many kinds of flowers in the cold and arid Qinghai Province. So a number of scholars began to study the advantages of the local wild species, trying to pick out plant species domesticated from local flowers for landscaping and road greening. [Methods] In order to solve the problem of the cultivation and domestication of greening plants in the cold and arid Qaidam regions, Qinghai Province, explore the photosynthetic physiological characteristics of Potentilla fruticosa and its quantitative relations with soil moistures, provide a scientific basis to the scientific irrigation management of P. fruticosa, and improve the water use efficiency of alpine and arid regions in addition, 17 P. fruticosa seedlings (2 years old) were taken as the research object under a pot experiment to study its rules of response to drought stress and rewatering. Leaf water potential, photosynthetic parameters and photosynthetic diurnal variation process were investigated. Quantitative relations between net photosynthetic rate, transpiration rate, water use efficiency and soil water content were explored to determine the suitable soil moisture thresholds of photosynthesis and water use efficiency of P. fruticosa. [Results & Conclusions] The main results are as follows: 1) With the lowering of soil moisture to 5.97%, more than half of the leaves dried up, and the wilting moisture content of P. fruticosa was about4.02%. 2)The effects of soil moisture content on leaf water potential and photosynthetic parameters had threshold, too high and too low soil moisture content would inhibit the physiological activity of P. fruticosa. The morning leaf water potential, net photosynthetic rate, and transpiration rate of P. fruticosa had obvious threshold response to the changes of soil moisture. The morning leaf water potential would decrease if the soil moisture was lower than 19.48%, and when the soil moisture varied from 17.03% to14.37%, the morning leaf water potential would come down at the maximum speed and amplitude, indicating that this range of soil moisture content would significantly improve the water absorption and drought resistance of P. fruticosa. When the net photosynthetic rate reached its maximum the soil moisture content was 20.83%, the soil moisture content of highest water use efficiency was 13.82%, and the hydration compensation point was 4.38%. 3) Under the condition of sandy loam, the net photosynthetic rate could keep above 70% of its maximum unless the soil moisture went down to 12.71%. When the soil moisture content was about 8.33% the water use efficiency could keep 70% of its maximum, and the change speed of water use efficiency would slow down. So soil water content varing from 8.33% to 12.71% could not only satisfy the basic need for the growth of P. fruticosa, but also improve the efficiency of water use to the largest extent. 4) During the growing season of P. fruticosa in Qinghai Province (July) without any rain, the irrigation should be conducted once every two weeks for good growth. P. fruticosa is able to recover from 2 -3 weeks' drought after irrigation, but will die of the drought stress which lasts over one month.