Vegetation diversity and interaction is thought to have a beneficial effect on ecosystem functioning, particularly improving ecosystem resistance to drought. This is of significant importance in the context of a warmer world, as extreme events such as droughts become more likely. Most of the studies performed so far on vegetation interaction are based on observations. Here we use the land surface model JULES to study the potential of vegetation mixing to mitigate the negative effect of drought events on the land surface through interaction, a mechanism which is difficult to study in situ at large scales. Using a set of simulations with mixed and unmixed vegetation, we show that the carbon, water, and energy fluxes are significantly affected by vegetation competition for water resources. The interaction is in general beneficial for the ecosystem carbon assimilation due to a better use of water resources. This benefit is highest when traits between vegetation types concerning resource competition overlap least. For a tree‐grass combination, mixing improves carbon assimilation by 5% to 8% during summer. The benefit of mixing increases further under progressively more resource‐limited conditions up to an inflection point with a benefit of 14%, after which it falls back to zero under extremely dry conditions. Mixing also tends to reduce the interannual variability of the ecosystem carbon sink and therefore improves the resistance of the ecosystem. Our results highlight the importance of vegetation interaction in climate simulations and impact studies and the potential of vegetation mixing as a mitigation tool.