Drought has become a serious environmental problem affecting people all around the world as a result of rising atmospheric pollution and global warming. Through symbiosis with Arbuscular mycorrhizal fungus (AMF), plants may mitigate the impacts of drought stress on growth and development as well as physiological metabolism. As a pioneer plant for windbreak and sand fixation, the symbiosis between AMF and Ammodendron bifolium can improve its drought resistance, which is of great significance for species protection and desertification control. In this study, A. bifolium seedlings were used as the test subject in a pot experiment with four drought stress gradients and two inoculation treatments to examine the effects of water treatment and AMF inoculation on the growth of the seedlings. The results showed that drought stress significantly inhibited the growth indexes of A. bifolium seedlings such as the height, basal diameter, blades number, and biomass, and that inoculation with AMF could promote the growth of A. bifolium seedlings and help mitigate the damage caused by drought stress. Drought stress increased the antioxidant enzyme activity and proline (Pro) accumulation in A. bifolium plants, and AMF inoculation induced higher antioxidant enzyme activity and lower malondialdehyde (MDA) and Pro contents in A. bifolium seedlings compared to non-AMF-inoculated plants. Drought stress harmed the chloroplast structure, reduced the chlorophyll concentration, and decreased the photosynthetic efficiency in A. bifolium seedlings. The ability of AMF-inoculated plants to withstand drought was enhanced by increased levels of photosynthetic pigments, higher photosynthetic activity, and increased photosynthetic product accumulation in the roots. These results suggest that AMF inoculation can alleviate drought-induced damage by promoting plant growth and improving plant antioxidant, osmoregulation, and photosynthetic capacity. In the context of increasing drought due to global warming, AMF inoculation can be an excellent way to enhance A. bifolium drought resistance.