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In arid regions, C3 vegetation is assumed to be more sensitive to precipitation and CO2 fertilization than C4 vegetation. In this study, normalized difference vegetation index (NDVI) is used to examine vegetation growth in the arid Lower Heihe River Basin, northwestern China, for the past three decades. The results indicate that maximum NDVI (MNDVI) of the area increases over the years and is significantly correlated with precipitation (R = 0.47 and p < 0.01), not temperature (R = -0.04). The upper limit of C3 vegetation cover of the area shows a yearly rising trend of 0.6% or an overall increase of 9% over the period of 25 years, primarily due to the CO2 fertilization effect (CO2 rising 14%) over the same period. C3 dominant areas can be potentially distinguished by both MNDVI asynchronous seasonality and a significant relation between MNDVI and cumulative precipitation. This study provides a potential tool of identifying C3 vegetation from C4 vegetation and confirms the CO2 fertilization effect in this arid region.