Abstract: Questions Changes in the functional composition of tree communities along resource availability gradients have received attention, but it is unclear whether understorey and canopy guilds respond similarly to different light, biomechanical, and hydraulic constraints. Location An anthropically undisturbed, old-growth wet evergreen dipterocarp forest plot located in Karnataka State, India. Methods We measured leaf and wood traits of 89 tree species representing 99% of all individuals in a 10-ha permanent plot with varying topographic and canopy conditions inferred from Light Detection And Ranging (LiDAR) data. We assigned tree species to guilds of canopy and understorey species and assessed the variation of the guild-weighted means of functional-trait values with canopy height and topography. Results The functional-trait space did not differ between canopy and understorey tree species. However, environmental filtering led to significantly different functional composition of canopy and understorey guild assemblages. Furthermore, they responded differently along environmental gradients related to water, nutrients, light, and wind exposure. For example, the canopy guild responded to wind exposure while the understorey guild did not. Conclusions The pools of understorey and canopy species are functionally similar. However, fine-scale environmental heterogeneity impacts differently on these two guilds, generating striking differences in functional composition between understorey and canopy guild assemblages. Accounting for vertical guilds improves our understanding of forest communities' assembly processes.