Whereas warming enhances plant nutrient status and photosynthesis in most terrestrial ecosystems, dryland vegetation is vulnerable to the likely increases in evapotranspiration and reductions in soil moisture caused by elevated temperatures. Any warming-induced declines in plant primary production and cover in drylands would increase erosion, land degradation and desertification. We conducted a four-year manipulative experiment in a semiarid Mediterranean ecosystem to evaluate the impacts of a 2ºC warming on the photosynthesis, transpiration, leaf nutrient status, chlorophyll content, isotopic composition, biomass growth and post-summer survival of the native shrub Helianthemum squamatum. We predicted that warmed plants would show reduced photosynthetic activity and growth, primarily due to the greater stomatal limitation imposed by faster and more severe soil drying under warming. On average, warming reduced net photosynthetic rates by 36% across the study period. Despite this strong response, warming did not affect stomatal conductance and transpiration. The reduction of peak photosynthetic rates with warming was more pronounced in a drought year than in years with near-average rainfall (75% and 25-40% reductions relative to controls, respectively), with no indications of photosynthetic acclimation to warming through time. Warmed plants had lower leaf N and P contents, δ13C and sparser and smaller leaves than control plants. Warming reduced shoot dry mass production by 31%. However, warmed plants were able to cope with large reductions in net photosynthesis, leaf area and shoot biomass production without changes in post-summer survival rates. Our findings highlight the key role of non-stomatal factors (biochemical and/or nutritional) in reducing net carbon assimilation rates and growth under warming, which has important implications for projections of plant carbon balance under the warmer and drier climatic scenario predicted for drylands worldwide. Projected climate warming over the coming decades could reduce net primary production by about one-third in semiarid gypsum shrublands dominated by H. squamatum.