Based on turbulence observations during the growing seasons of 2007 and 2008 in the semi-arid grasslands of Inner Mongolia, where Leymus Chinensis and Stipa Grandis are two dominant species, the characteristics of water and CO₂ fluxes under different soil water conditions and the controlling factors of these fluxes are analyzed. Results indicate that: (1) during the peak growing season on a daily time scale, the surface latent heat flux is largely dependent on soil water content under dry conditions, while it is more determined by net surface radiation under wet conditions when soil moisture content is sufficient; (2) compared with the grassland where Stipa Grandis is the dominant species, the grassland with dominant species of Leymus Chinensis has higher leaf area index, larger latent heat flux, higher CO₂ assimilation capacity and larger net CO₂ uptake under conditions with ample water in the soil. In contrast, the stomata of the grass leaf close at the Leymus Chinensis site in response to soil water stress, and the latent heat flux and the CO₂ uptake are larger at the Stipa Grandis site. This indicates that the Stipa Grandis grassland is more drought-resistant than the Leymus Chinensis grassland; (3) the surface conductance is a key factor that can explain impacts of soil water condition on the water and CO₂ fluxes over Leymus Chinensis and Stipa Grandis grasslands.