We aim to achieve a mechanistic understanding of the eco-physiological processes in Larix decidua and Pinus mugo var. uncinata growing on north- and south-facing aspects in the Swiss National Park in order to distinguish the short- and long-term effects of a changing climate. To strengthen the interpretation of the δ18O signal in tree rings and its coherence with the main factors and processes driving evaporative δ18O needle water enrichment, we analyzed the δ18O in needle, xylem and soil water over the growing season in 2013 and applied the mechanistic Craig–Gordon model (1965) for the short-term responses. We found that δ18O needle water strongly reflected the variability of relative humidity mainly for larch, while only δ18O in pine xylem water showed a strong link to δ18O in precipitation. Larger differences in offsets between modeled and measured δ18O needle water for both species from the south-facing aspects were detected, which could be explained by the high transpiration rates. Different soil water and needle water responses for the two species indicate different water-use strategies, further modulated by the site conditions. To reveal the long-term physiological response of the studied trees to recent and past climate changes, we analyzed δ13C and δ18O in wood chronologies from 1900 to 2013. Summer temperatures as well as summer and annual amount of precipitations are important factors for growth of both studied species from both aspects. However, mountain pine trees reduced sensitivity to temperature changes, while precipitation changes come to play an important role for the period from 1980 to 2013. Intrinsic water-use efficiency (WUEi) calculated for larch trees since the 1990s reached a saturation point at elevated CO2. Divergent trends between pine WUEi and δ18O are most likely indicative of a decline of mountain pine trees and are also reflected in decoupling mechanisms in the isotope signals between needles and tree-rings.