Warmer temperatures and extended drought in the Mediterranean Basin are becoming increasingly important in determining plant physiological processes and affecting the regional carbon budget. The responses of plant physiological variables such as shoot water potential (Ψ), carbon-assimilation rates (A), stomatal conductance (gs) and intrinsic water-use efficiency (iWUE) to these climatic regimes, however, are not well understood. We conducted long-term (16 years) field experiments with mild nocturnal warming (+0.6 °C) and drought (−20% soil moisture) in a Mediterranean early-successional shrubland. Warming treatment moderately influenced Ψ, A and gs throughout the sampling periods, whereas drought treatment strongly influenced these variables, especially during the summer. The combination of a natural drought in summer 2003 and the treatments significantly decreased A and iWUE. Foliar δ13C increased in the treatments relative to control, but not significantly. The values of Ψ, A and gs were correlated negatively with vapor-pressure deficit (VPD) and positively with soil moisture and tended to be more dependent on the availability of soil water. The plant, however, also improved the acclimation to drier and hotter conditions by physiological adjustments (gs and iWUE). Understanding these physiological processes in Mediterranean shrubs is crucial for assessing further climate change impacts on ecosystemic functions and services.