High‐elevation forests are experiencing high rates of warming, in combination with CO2 rise and (sometimes) drying trends. In these montane systems, the effects of environmental changes on tree growth are also modified by elevation itself, thus complicating our ability to predict effects of future climate change. Tree‐ring analysis along an elevation gradient allows quantifying effects of gradual and annual environmental changes. Here, we study long‐term physiological (ratio of internal to ambient CO2, i.e., Ci/Ca and intrinsic water‐use efficiency, iWUE) and growth responses (tree‐ring width) of Himalayan fir (Abies spectabilis) trees in response to warming, drying, and CO2 rise. Our study was conducted along elevational gradients in a dry and a wet region in the central Himalaya. We combined dendrochronology and stable carbon isotopes (δ13C) to quantify long‐term trends in Ci/Ca ratio and iWUE (δ13C‐derived), growth (mixed‐effects models), and evaluate climate sensitivity (correlations). We found that iWUE increased over time at all elevations, with stronger increase in the dry region. Climate–growth relations showed growth‐limiting effects of spring moisture (dry region) and summer temperature (wet region), and negative effects of temperature (dry region). We found negative growth trends at lower elevations (dry and wet regions), suggesting that continental‐scale warming and regional drying reduced tree growth. This interpretation is supported by δ13C‐derived long‐term physiological responses, which are consistent with responses to reduced moisture and increased vapor pressure deficit. At high elevations (wet region), we found positive growth trends, suggesting that warming has favored tree growth in regions where temperature most strongly limits growth. At lower elevations (dry and wet regions), the positive effects of CO2 rise did not mitigate the negative effects of warming and drying on tree growth. Our results raise concerns on the productivity of Himalayan fir forests at low and middle (<3,300 m) elevations as climate change progresses.