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Dryland vegetation is typically organized into discrete plant patches separated by bare soil. Vegetated patches function as resource sinks by capturing water, dust, and sediments, whereas bare areas act as sources of runoff and sediment. Although observational and trait-based studies generally indicate positive effects of plant functional diversity on dryland ecosystem functioning, identifying causal relationships and underlying mechanisms requires experimental approaches that explicitly manipulate biodiversity. Such experiments remain scarce in dryland ecosystems, particularly those addressing hydrological and geomorphological processes. Here, we present results from a large-scale biodiversity-ecosystem functioning experiment investigating how within-patch diversity, ranging from monospecific to highly diverse patches (either 1, 2, 4 or 8 species, organized in functionally contrasting groups), modulates runoff-driven source-sink dynamics in dryland systems. Using more than 600 vegetation patches established by planting one-year-old seedlings in manually dug holes, we quantified source-sink dynamics by relating vegetation productivity metrics (mean and maximum NDVI, changes in patch height, and changes in patch cover) to the characteristics of upslope bare-soil micro-catchments draining into each patch (micro-catchment area and mean and maximum flowlength). All metrics were derived from drone-based surveys conducted over a three-year period. Both source-area size and maximum flow length were positively correlated with all assessed patch performance metrics. Diversity significantly modulated the strength of these relationships, with patches containing four and eight species consistently exhibiting the strongest source-patch coupling, whereas two-species treatments showed the weakest relationships. Among patches composed of a single functional group (one or two species), small shrubs were most sensitive to source-area size, while perennial grasses showed little to no response. Overall, our results support the hypothesis that within-patch plant functional diversity enhances runoff capture and use, although some functional groups alone can also strongly increase patch sink capacity. These results have direct applications for dryland restoration, as provide evidence that planting several functionally contrasting species in a shared planting hole could promote a more efficient sink function in the vegetation patches.