Habitat differentiation between polyploid and diploid plants are frequently observed, with polyploids usually occupying more stressed environments. In woody plants, polyploidization can greatly affect wood characteristics but knowledge of its influences on xylem hydraulics is scarce. The four Betula species in NE China, representing two diploids and two polyploids with obvious habitat differentiation, provide an exceptional study system for investigating the impact of polyploidization on environmental adaptation of trees from the point view of xylem hydraulics. To test the hypothesis that changes in hydraulic architecture play an important role in determining their niche differentiation, we measured wood structural traits at both the tissue and pit levels and quantified xylem water transport efficiency and safety in these species. The two polyploids had significantly larger hydraulic weighted mean vessel diameters than the two diploids (45.1 and 45.5 vs 25.9 and 24.5 μm) although the polyploids are occupying more stressed environments. As indicated by more negative water potentials corresponding to 50% loss of stem hydraulic conductivities, the two polyploids exhibited significantly higher resistance to drought-induced embolism than the two diploids (−5.23 and −5.05 vs −3.86 and −3.13 MPa) despite their larger vessel diameters. This seeming discrepancy is reconciled by distinct characteristics favoring greater embolism resistance at the pit level in the two polyploid species. Our results showed clearly that the two polyploid species have remarkably different pit-level anatomical traits favoring greater hydraulic safety than their congeneric diploid species, which have likely contributed to the abundance of polyploid birches in more stressed habitats; however, less porous inter-conduit pits together with a reduced leaf to sapwood area may have compromised their competitiveness under more favorable conditions. Contrasts in hydraulic architecture between diploid and polyploid Betula species suggest an important functional basis for their clear habitat differentiation along environmental gradients in Changbai Mountain of NE China.