Diurnal patterns of gas exchange and chlorophyll (Chl) fluorescence parameters of photosystem 2 (PS2) as well as H2O2 content were analyzed in Reaumuria soongorica (Pall.) Maxim., a perennial semi-shrub. The rate of photorespiration was estimated by combined measurement of gas exchange and Chl fluorescence. The rate of photorespiration increased with the increasing drought stress (DS). The ratio of carboxylation electron flow to oxygenation electron flow (Jc/Jo) and the maximal photochemical efficiency of PS2 (variable to maximum fluorescence ratio, Fv/Fm) decreased with the increasing DS. Fv/Fm in isonicotinic acid hydrazide (INH)-sprayed plants was lower than that in normal plants under moderate DS, but no significant difference was observed under severe DS. H2O2 content in INH-sprayed plants was significantly lower than that in normal plants under severe DS. Taken together, photorespiration in R. soongorica consumed excess electrons and protected photosynthetic apparatus under moderate DS, whereas it accelerated H2O2 accumulation markedly and induced the leaf abscission under severe DS.