Questions. Changes in the functional composition of tree communities along resource availability gradients have received attention, but it is unclear whether or not understory 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 LiDAR data. We assigned tree species to guilds of canopy and understory 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 understory tree species. However, environmental filtering led to significantly different functional composition of canopy and understory 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 understory guild did not. Conclusions. The pools of understory and canopy species are functionally similar. However, fine-scale environmental heterogeneity impacts differently on these two guilds, generating striking differences in functional composition between understory and canopy guild assemblages. Accounting for vertical guilds improves our understanding of forest communities’ assembly processes.