Wildfire risks are increasing due to the atmospheric and vegetation aridity under global warming. Plant hydraulic stress (PHS) functions regulate water transport along the soil–plant–atmosphere continuum under water stress conditions, which probably results in shifts in ecosystem wildfire regimes. Currently, how the PHS functions affect wildfire occurrence and subsequently the ecosystem carbon cycle via carbon loss at a global scale remains unclear. Here, we conducted global simulations during 1850–2010 using Community Land Model version 5 with and without the PHS configuration and quantified the PHS-induced changes. From the global perspective, the PHS functions increased plant transpiration, induced hydraulic redistribution (HR) of soil water by root, and decreased soil moisture; then, the functions increased fire occurrence (count), fire induced carbon loss, and ecosystem net primary productivity by 72%, 49%, and 15%, respectively. Spatially, the PHS functions greatly promoted fire occurrence and the consequent carbon loss in circumboreal forests and tropical savannas; whereas, the fire occurrence was limitedly affected or even decreased in equatorial rainforests. The strong downward HR process in the humid rainforests transported rainwater into deep soil layers, and strict stomatal regulation of the tropical trees restricted transpiration increment under atmospheric aridity, both of which helped to buffer the rainforests against drought and thus decreased fire risk. In contrast, dry savannas showed substantial upward HR, which increased water loss via soil evaporation and transpiration of the grasses with shallow roots. The tree–grass competition for limited soil moisture in the savannas benefited soil evaporation, which could aggravate plant hydraulic failure and increase wildfire risk.