The role of trait variability in mediating plant community responses to environmental change remains poorly resolved. We conducted a 5-year study across 45 fragments in a tropical dry forest to understand shifts in trait means and variabilities of the trees classified into two functional types, drought avoiders and drought tolerators, across a soil moisture gradient, and their association with changes in site-level productivity. Trait means changed in opposite directions across the soil moisture gradient for the two functional types, especially for water safety and leaf carbon capture traits. Trait variabilities were generally greater at dry sites for drought avoiders and at wet sites for drought tolerators. Site-level growth rates were related to different sets of trait means and variabilities for the two functional types. Projected changes in precipitation will likely shift the vegetation to greater representation of drought tolerators and will be accompanied by non-linear increases in standing biomass.