In agricultural crops, forests and grasslands, water deficit often occurs in the presence of cues from neighbouring vegetation. However, most studies have addressed separately the mechanisms of plant growth responses to these two aspects of the environment. Here we show that transferringArabidopsis thalianaseedlings to agar containing polyethylene glycol (PEG) to restrict water availability reduces hypocotyl growth responses to shade without simultaneous affecting cotyledon expansion or its response to shade. Water restriction diminished the activity of thePHYTOCHROME INTERACTING FACTOR 4 (PIF4), PIF5, PIF3andPIF3-LIKE 1gene promoters, particularly in seedlings exposed to simulated shade. The response ofPIF4expression to PEG required the presence of its positive morning regulators CIRCADIAN CLOCK ASSOCIATED 1 (CCA1) and LATE ELONGATED HYPOCOTYL (LHY), which also reduced their expression in response to PEG. Water restriction diminished the nuclear abundance of PIF4 in hypocotyl cells only in the seedlings exposed to shade. In addition to the changes inPIF4levels, post-transcriptional processes also contributed to the response to PEG. Hypocotyl growth showed significant triple interaction among water availability, shade and the presence of PIF4, PIF5 and PIF3. Collectively, these results unveil PIFs as a hub that interlinks shade and drought information to control growth.