The physiological mechanisms driving treeline formation succession captured the attention of ecologists many years ago, yet they are still not fully understood. In this study, physiological parameters (soluble sugars, starch, and nitrogen) were investigated in combination with transcriptomic analysis in the treeline tree species Picea crassifolia. The study was conducted in the middle of Qilian Mountain Reserves, Gansu Province, China, within the elevation range of 2500–3300 m. The results showed that the concentrations of non-structural carbohydrates decreased with increasing elevation in the current-year needles and current-year branches, as well as in the coarse and fine roots. RNA-Seq demonstrated that 483 genes were upregulated and 681 were downregulated in the comparison of 2900 and 2500 m (2900 vs. 2500), 770 were upregulated and 1006 were downregulated in 3300 vs. 2500, and 282 were upregulated and 295 were downregulated in 3300 vs. 2900. Gene Ontology (GO) and Kyoto Encyclopedia of Genes and Genomes (KEGG) analysis revealed that the differentially expressed genes were highly enriched in photosynthesis-related processes, carbon fixation and metabolism, and nitrogen metabolism. Furthermore, almost all photosynthesis-related genes were downregulated, whereas many genes involved in cuticle lipids and flavonoid biosynthesis were upregulated, contributing to the survival of P. crassifolia under the treeline condition. Thus, our study provided not only molecular evidence for carbon limitation hypothesis in treeline formation, but also a better understanding of the molecular mechanisms of treeline tree survival under adverse conditions.