Hydraulic lift (HL) has been shown to improve performance of species occurring next to a plant engaged in HL, but whether this process plays an important role in seedling survival and growth in arid environments remains largely unknown. Here, we tested the influence of HL on the interaction between Retama sphaerocarpa, a nurse lifter shrub from western Mediterranean basin, and the protégé shrub Marrubium vulgare. Seedlings of Marrubium were planted under the canopy of Retama in three tube types inserted into the soil. Tubes either did not affect (Mesh), reduced (Netting) or fully prevented root competition (PVC). At the same time, these tubes allowed (Mesh, Netting) or prevented (PVC) soil water flux to/from the tube. Additional seedlings were planted in Mesh tubes in gaps (open spaces between shrubs). Hydraulic lift was measured using soil psychrometers. We detected HL patterns only in mesh and Netting tubes but not in solid-walled PVC tubes. Seedling survival was comparable where root competition was reduced and HL allowed (Netting) and where they were fully prevented (PVC) while survival was 23% lower in Mesh tubes (full root competition plus HL) and no seedlings survived in gaps. Differences in seedlings biomass showed somehow similar patterns, although biomass was greatest in PVC tubes followed by Netting tubes. These results show that, although HL might have contributed to seedling performance under the canopy of Retama, it did not offset root competition from neighbours; when full root competition and HL occurred, competitive effects were stronger than facilitative effects of HL. Overall, intense root competition underneath nurse plants may outweigh the positive effects of the extra water meant by HL. Rather, microclimate amelioration and increased soil fertility under shrubs could account for the reported facilitation of Marrubium seedlings by Retama.