Based on the investigation for vegetation and soil habitat in the desert areas in the middle-lower reaches of the Heihe River, the relationship between the distribution of vascular plant and cryptogam species diversity and the variation of soil water contents has been studied. Species diversity was presented by species richness and species abundance. Soil water contents in the different investigative plots were used to present the characteristics of ecohydrological processes in the study areas. Our results show that the effects of the shallow soil water on the diversity of herbaceous species, in particular, on species diversity of annual plants and ephemeral plants are much more significant than that on woody species. The woody species diversity is mainly depends on the deeper soil water contents. Cryptogamic diversity is closely associated with the soil shallow water content. The higher soil water contents are beneficial to the development and colonization of cryptogamic diversity, dominated by mosses and lichen. However, the lower soil water contents are favorable for developing cryptogamic diversity characterized by cyanobacteria and desert algae. The maintaining of cryptogamic diversity improved the habitat for development of species diversity of vascular plants in arid regions. In addition, the distribution of plant species is also regulated by biological traits of these plants, such as psammophytic and halophytic species. The effects of decreasing of soil water on species abundance are more obvious than that on species richness. In general, soil water contents of plots not only directly influence plant species diversity, but indirectly act on it through re-allocation of soil sources availability by soil water. Therefore, it will be a great challenge for biodiversity conservation how to maintain a relatively stable soil water in the middle-lower reaches of the Heihe River.