Abstract: Physiological responses of Artemisia sphaerocephala to water stress were studied by treatment of 5%, 15% and 25% polyethylene glycol (PEG-6000). Results showed that, relative water content of leaves significantly reduced with the increasing concentration of PEG, the fatty acid compositions of leaves dramatically changed, PEG stress leads fatty acid of A. sphaerocephala leaves saturated. Under 5% and 15% PEG treatments, leaves lipid tend to saturated, which reducing the chance of peroxidation of unsaturated fatty acid and preventing damage of cell membranes; under 25% PEG treatment, lipid saturation led to membrane function impairment. Palmitoleic acid and Linoleic acid play important roles in maintaining certain membrane lipid unsaturation in A. sphaerocephala under water stress. The contents of two important osmotic adjustment substances, proline and water soluble sugar, increased significantly under water stress, however, this could not prevent the damage of cell membrane induced by fatty acid peroxidation.