Paulownia is a forest species native to China and Korea, recently introduced to Tunisia for its valuable wood and forage potential. Few studies have been conducted on the response of this tree to water stress. In this context, a field experiment was carried out in the El Fahs delegation (Zaghouan governorate, Tunisia) to study the behaviour of Paulownia trees ('Shan Tong') subjected to three irrigation treatments (1/2, 1/7, and 1/21 days). The biomass allocation, carbon sequestration capacity, and physiological responses to water deficit were investigated. The results revealed that the majority of biomass (65%) was allocated to the stems, while the leaves and roots each accounted for approximately 36%, with roots contributing more than 34% of the total biomass, differing from previous reports. In terms of carbon sequestration, the species demonstrated a notable capacity, storing 42% in leaves, 38.57% in stems, and 38.86% in roots, highlighting its potential for reforestation and urban greening initiatives. Physiological analyses indicated significant decreases in water potential and relative water content under prolonged drought stress, with the most severe water deficit treatment (T1/21) showing water potential (Psi w) values as low as-9.2 MPa. The leaf morphology also adapted to water scarcity, with increased specific leaf area in drought treatments, up by 40% from T1/2 to T1/21. Despite a decline in gas exchange efficiency and stomatal conductance under water stress, water use efficiency improved, suggesting an adaptive response. Chlorophyll content and stomatal density were optimized under drought conditions, reinforcing the species' ability to withstand prolonged water deficits. These findings suggest that 'Shan Tong' exhibits physiological plasticity, making it a promising species for cultivation in semi-arid regions, though further studies on its long-term growth and biomass production under extreme drought conditions are warranted.