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The fluxes of energy, water, and carbon from terrestrial ecosystems influence the atmosphere. Land–atmosphere feedbacks can intensify extreme climate events like severe droughts and heatwaves because low soil moisture decreases both evaporation and plant transpiration and increases local temperature. Here, we combine data from a network of temperate and boreal eddy covariance towers, satellite data, plant trait datasets, and a mechanistic vegetation model to diagnose the controls of soil moisture feedbacks to drought. We find that climate and plant functional traits, particularly those related to maximum leaf gas exchange rate and water transport through the plant hydraulic continuum, jointly affect drought intensification. Our results reveal that plant physiological traits directly affect drought intensification and indicate that inclusion of plant hydraulic transport mechanisms in models may be critical for accurately simulating land–atmosphere feedbacks and climate extremes under climate change.