Biological soil crusts are communities composed of cryptogamic organisms such as lichens, mosses, cyanobacteria and green algae that form a skin on soils in areas where vascular plants are excluded or limited by water availability or temperature. The lichen Psora decipiens (Hedw.) Hoffm. is a characteristic key organism in these communities in many different biomes. The species has a generalistic ecology and high morphological variation, which contributes to the ability of the species to withstand environmental changes. We investigated whether different populations, based on site and associated morpho-anatomical differences, incorporate functional water relations and how/whether this was driven by changes in abiotic factors. Samples were collected from two climatically distinct sites, one ‘dry’ site in southern Spain and one ‘wet’ site in the Austrian Alps. Our results showed that samples from the dry site had a significantly thicker epinecral layer, higher specific thallus area, a faster water uptake and contained more water per dry mass, all of which contributed to a much slower drying rate. Both populations showed a highly adjusted water gain that incorporates functional water relations and diffusion properties as a result of local water availability. We show eco-physiological and morphological mechanisms that underlie the high variability in P. decipiens and suggest how these might provide ecological benefits for this generalist lichen species.