The majority of tallgrass prairie root biomass is located in the upper soil layers (0–25 cm), but species differences exist in reliance on soil water at varying depths. These differences have led to the hypothesis that resource partitioning belowground facilitates species co-existence in this mesic grassland. To determine if plant water relations can be linked to soil water partitioning as a potential mechanism allowing C3 species to persist among the more dominant C4 grasses, we measured differences in the source of water-use using the isotopic signature of xylem water, volumetric soil water content at 4 depths, and leaf water potentials. Data were collected for seven species representing C4 grasses, C3 forbs and C3 shrubs over three growing seasons at the Konza Prairie (Kansas, USA) to encompass a range of natural climatic conditions. C4 grasses relied on shallow soil water (5 cm) across the growing season and had midday leaf water potentials that were highly correlated with shallow soil water regardless of soil water availability at other portions of the soil profile (20, 40 and 90 cm). In contrast, C3 species only used shallow soil water when plentiful at this depth; these species increased their dependence on soil water from greater depths as the upper soil layers dried. Structural equation models describing plant water relations were very similar for the three C4 species, whereas a unique set of models and drivers were identified for each of the C3 species. These results support soil water partitioning as a mechanism for species coexistence, as C4 species in this grassland have relatively consistent dependence on water in shallow soil layers, whereas C3 species show niche differentiation in water use strategies to avoid competition with C4 grasses for water in shallow soil layers when this resource is limiting and leaf water stress is high.