The extinction of species can destabilize ecological processes. A way to assess the ecological consequences of species loss is by examining changes in functional diversity. The preservation of functional diversity depends on the range of ecological roles performed by species, or functional richness, and the number of species per role, or functional redundancy. However, current knowledge is based on short timescales and an understanding of how functional diversity responds to long-term biodiversity dynamics has been limited by the availability of deep-time, trait-based data. Here, we compile an exceptional trait dataset of fossil molluscs from a 23-million-year interval in the Caribbean Sea (34 011 records, 4422 species) and develop a novel Bayesian model of multi-trait-dependent diversification to reconstruct mollusc (i) diversity dynamics, (ii) changes in functional diversity, and (iii) extinction selectivity over the last 23 Myr. Our results identify high diversification between 23–5 Mya, leading to increases in both functional richness and redundancy. Conversely, over the last three million years, a period of high extinction rates resulted in the loss of 49% of species but only 3% of functional richness. Extinction rates were significantly higher in small, functionally redundant species suggesting that competition mediated the response of species to environmental change. Taken together, our results identify long-term diversification and selective extinction against redundant species that allowed functional diversity to grow over time, ultimately buffering the ecological functions of biological communities against extinction.