Arizona Cypress is one of the drought-resistant, aromatic, and aesthetically pleasing trees having several pharmacological uses. Certain microorganisms contribute to the secondary metabolism and synthesis of bioactive compounds in aromatic and medicinal plants. This study aimed to determine the photosynthetic pigments, total phenolic content, antioxidant capacity, and essential oil composition of Arizona cypress under two irrigation regimes and microbial inoculations. We established a factorial experiment with three mycorrhizae inoculations (Rhizophagusirregularis, Funneliformismosseae, and a mixture of R.irregularis and F.mosseae), a rhizobacterium inoculation (Pseudomonasfluorescens), and two irrigation regimes (well-watered and water stress). Under the water stress regime, seedlings inoculated with F.mosseae (0.46%) and non-inoculated control plants (0.29%) had the highest and lowest essential oil contents, respectively. GC–MS analysis revealed that limonen, a-pinene, terpinen-4-ol, and umbellulone were the most abundant compounds in the seedlings and treatments under study. The water stress regime had a significant and dominant effect on essential oil and antioxidant capacity, whereas seedling growth and photosynthetic pigments tended to decrease under stress conditions. However, co-inoculation of seedlings with mycorrhizae and the bacterium resulted in an increase in phenolic compounds and carotenoids. Under conditions of water stress and mycorrhizal symbiosis, the results of the current study may help increase the level of valuable compounds in Arizona cypress for further pharmaceutical applications.