To explore ecological mechanisms sustaining a riparian forest growing under unstable environmental conditions, we performed replicate censuses to determine the structure and dynamics of a Populus euphratica population in the vicinity of Ejina Oasis (Inner Mongolia). Slight undulations in ground level and salt concentration affected forest structure was detected. P. euphratica was preferentially distributed on high ground with high salinity soil. The frequency distribution of tree heights was bimodal, with the population members falling into two groups: those <2 m tall (saplings) and those >2 m tall (canopy trees). Small individuals comprised a sapling bank on the forest floor. The forest canopy was stable over time, but the seedling bank beneath it was highly dynamic. Since total plant water consumption remained constant under different weather conditions, we suggest that strong intraspecific competition for water occurs among canopy trees. Individual saplings persisted for about 5 years, and the sapling bank formed guaranteed regeneration of the forest. We view sapling dieback through partial defoliation as a mechanism for escaping water-deficiency stress.