Soil water potential (SWP) strongly influences plant productivity and ecosystem functioning, particularly in arid regions characterized by sporadic and pulsed rainfall. This work aims to improve understanding of the response of SWP to varied rainfall pulses, and of the water‐use strategies of a widespread C4 shrub (Haloxylon ammodendron, HA) in arid northwestern China. Rainfall manipulation experiments and field measurements on HA were undertaken to explore the response features of SWP and plant physiological status to pulsed rainfall events of varied magnitudes and durations. The physiological state of HA was evaluated by quantifying critical metrics indicative of plant water‐use strategies, including leaf water potential, photosynthetic rate and transpiration rate. The response value of SWP increased with rainfall magnitude and was most affected by three vital factors (antecedent SWP, total rainfall and rainfall intensity). Low antecedent SWP amplifies SWP's sensitivity to subsequent events, accelerating its response to smaller rainfalls (<5 mm) compared with larger ones (>15 mm). Small rainfall can increase SWP by 0.5–2 MPa in the 20‐cm layer, sustaining plant physiological activities under high antecedent SWP conditions (>−3.5 MPa), with a maximum average rise in photosynthetic rate of 9.20 ± 0.45 μmol CO2 m−2 s−1, enhancing HA's water use efficiency to 1.79 ± 0.22 μmol CO2 mmol−1 H2O. Therefore, small events play a vital role in maintaining SWP and promoting water use of desert plants. Given the nature of plants' utilization of small rainfall events, re‐examining ecologically valid SWP thresholds of HA and other similar desert plants is critical.