Water relations have been well documented in tree species, but relatively little is known about the hydraulic characteristics of crops. Here, we report on the hydraulic strategy of cotton (Gossypium hirsutum L.). Leaf gas exchange and in vivo embolism formation were monitored simultaneously on plants that were dried down in situ under controlled environment conditions, and xylem vulnerability to embolism of leaves, stems and roots was measured using intact plants. Water potential inducing 50% embolised vessels (P50) in leaves was significantly higher (less negative) than P50 of stems and roots, suggesting that leaves were the most vulnerable organ to embolism. Furthermore, the water potential generating stomatal closure (Pgs) was higher than required to generate embolism formation, and complete stomatal closure always preceded the onset of embolism with declining soil water content. Although protracted drought resulted in massive leaf shedding, stem embolism remained minimal even after ~90% leaf area was lost. Overall, cotton maintained hydraulic integrity during long-term drought stress through early stomatal closure and leaf shedding, thus exhibiting a drought avoidance strategy. Given that water potentials triggering xylem embolism are uncommon under field conditions, cotton is unlikely to experience hydraulic dysfunction except under extreme climates. Results of this study provide physiological evidence for drought resistance in cotton with regard to hydraulics, and may provide guidance in developing irrigation schedules during periods of water shortage.