Riparian forest veg etation in the lower Tarim River desert often faces a water and nitrogen deficiency. To investigate the ecological effects of drought stress and nitrogen limitation of arbuscular mycorrhizal fungi (AMF) on Alhagi sparsifolia seedlings at the vulnerable stage of growth, a control experiment was conducted on Alhagi sparsifolia seedlings with indoor potted plants. The main findings are as follows: drought stress inhibited the normal growth and development of Alhagi sparsifolia seedlings. When Alhagi sparsifolia seedlings were inoculated with AMF and at the N1 (50 mmol·L−1) nitrogen addition level, the mycorrhizal infection rate of Alhagi sparsifolia seedlings was the best: 84.44% under sufficient moisture content and 77.78% under drought stress. Under the same nitrogen treatment, the relative growth rate of Alhagi sparsifolia seedling height and base diameter, plant biomass, root system indicators (total root length, root surface area, root volume, average root diameter, the number of tips, and root shoot ratio), chlorophyll content (except for the chlorophyll a/b content at the N0 (0 mmol·L−1) nitrogen addition level), Fv/Fm, total nitrogen content, idole acetic acid (IAA) and gibberellic acid (GA) content were initially decreased, then increased and finally decreased again. Each of these indicators was increased significantly after being inoculated with AMF, and they reached their maximum value under the normal moisture and AMF treatment; however specific root length (except for at the N0 (0 mmol·L−1) nitrogen addition level), minimal fluorescence (Fo), antioxidant enzyme activity, the contents of osmotic regulation substances, abscisic acid (ABA) and strigolactones (SLs) contents were initially increased, then decreased and finally increased again, and they reached their maximum value under drought stress and AMF treatment. Under the same CK (black control), D (drought stress), CK + A (inoculated with AMF under black control), and D + A (inoculated with AMF under drought stress) treatments, all of the above indicators, except for specific root length, chlorophyll a/b content, minimal fluorescence (Fo), maximum fluorescence (Fm) and malondialdehyde (MDA) content initially increased and then decreased with the increasing nitrogen addition rate, and they reached the maximum value at the N1 (50 mmol·L−1) nitrogen addition level. Therefore, in the arid and N-deficient lower Tarim River region, Alhagi sparsifolia seedlings established an efficient symbiotic structure with AMF, which improved the drought resistance of seedlings and promoted the rapid passage of seedlings through the growth vulnerability period. This indicates that AMF inoculation is a key link in the survival strategy of Alhagi sparsifolia.