Intra-annual density fluctuation (IADF) is a structural modification of the tree ring in response to fluctuations in the weather. To reveal the timings and physiological mechanisms behind IADF formation, we monitored cambial activity and wood formation in Chinese pine (Pinus tabuliformis) during 2017-2019 at three sites in semi-arid China. We compared the dynamics of xylem formation under a drought event, testing the hypothesis that drought affects the process of cell enlargement and thus induces the production of IADF. Wood microcores collected weekly from April to October were used for anatomical analyses to estimate the timings of cambial activity, and the phases of enlargement, wall thickening and lignification of the xylem. Xylogenesis started from late April to mid-September. Trees produced IADF in 2018. During that year, a drought in June limited cell production in the cambium, only 36% of the xylem cells being formed in IADF trees, compared to 68% in normal tree rings. IADF cells enlarged under drought in early July and started wall thickening during the rainfall events of late July. The drought restricted cell enlargement and affected wall thickening, resulting in narrow cells with wide walls. Cambium and cell enlargement recovered from the abundant rainfall, producing a new layer with large earlywood tracheids. IADF is a specific adaptation of trees to cope with water deficit events occurring during xylem formation. Our findings confirmed the hypothesis that the June-July drought induces latewood-like IADFs by limiting the process of cell enlargement in the xylem and suggests a higher occurrence of IADF in trees in arid climates of continental Asia if the more frequent drought events occurred in June.