Hydraulic segmentation between proximal and distal organs has been hypothesized to be an important protective mechanism for plants to minimize the detrimental effects of drought-induced hydraulic failure. Uncertainties still exist regarding the degree of segmentation and the role of stomatal regulation in keeping hydraulic integrity of organs at different hierarchies. In the present study, we measured hydraulic conductivity and vulnerability in stems, compound leaf petioles and leaflet laminas of Fraxinus mandshurica Rupr. and Juglans mandshurica Maxim. growing in Changbai Mountain of Northeast China to identify the main locality where hydraulic segmentation occurs along the shoot water transport pathway. Stomatal conductance in response to leaf water potential change was also measured to investigate the role of stomatal regulation in avoiding extensive transpiration-induced embolism. No major contrasts were found between stems and compound leaf petioles in either hydraulic conductivity or vulnerability to drought-induced embolism, whereas a large difference in hydraulic vulnerability exists between compound leaf petioles and leaflet laminas. Furthermore, in contrast to the relatively large safety margins in stems (4.13 and 2.04 MPa) and compound leaf petioles (1.33 and 1.93 MPa), leaflet lamina hydraulic systems have substantially smaller or even negative safety margins (−0.17 and 0.47 MPa) in F. mandshurica and J. mandshurica. Under unstressed water conditions, gas exchange may be better optimized by allowing leaflet vascular system function with small safety margins. In the meantime, hydraulic safety of compound leaf petioles and stems are guaranteed by their large safety margins. In facing severe drought stress, larger safety margins in stems than in compound leaf petioles would allow plants to minimize the risk of catastrophic embolism in stems by sacrificing the whole compound leaves. A strong coordination between hydraulic and stomatal regulation appears to play a critical role in balancing the competing efficiency and safety requirements for xylem water transport and use in plants.