Abstract During compound heatwave and drought events (CHDE), a significant amount of soil moisture is released into the atmosphere through evapotranspiration. In this study, we used multi‐source atmospheric water vapor isotope data sets, including satellite and ground‐based observations, to investigate the role of evapotranspired water vapor (EWV) during CHDE. We identified a vertical dipole pattern in water vapor isotopes, with depletion in the lower troposphere and enrichment in the middle troposphere. This pattern is primarily driven by vertically transported EWV, which can reach altitudes up to 500 hPa. More importantly, the upward transport of EWV plays a key role in the warming of the middle troposphere, creating a saddle‐shaped temperature structure of the troposphere. This suggests that enhancing the forecasting capability of numerical weather prediction models for extreme CHDE should involve an adequate consideration of the warming effect of vertically transported EWV within the model framework.