The inter-and intra-specific physiological differences, e.g. rates of net photosynthesis (PN) and transpiration (E), stomatal conductance (gs), and water use efficiency (WUE), were compared between two grasses, Calamagrostis epigeios (L.) Roth. and Psammochloa villosa (Trin.) Bor., and between their leaf types in a desertification steppe in North China. The two species had a similar habitat, but differed in leaf area and rhizome depth. Leaf PN, E, and g s for P. villosa were significantly greater than those for C. epigeios in the growing season, but WUE for the former species was only 50 and 80 % of that for the latter one in dry and rainy seasons, respectively. In general, leaf PN, E, g s, and WUE for both vegetative and reproductive shoots of the two species exhibited little variations between leaf types or with leaf age, even though there were some remarkable differences between dry and rainy seasons. The mean leaf PN and E in reproductive shoots of P. villosa were significantly lower than those in its vegetative shoots in rainy season, while these differences were much smaller for those of C. epigeios. P. villosa with deeper rhizome roots has relative higher leaf PN, E, and g s, but a smaller WUE in the arid desertification steppe region.