Sea-level rise threatens low-lying coastal ecosystems globally. In Florida, USA, salinity stress due to increased tidal flooding contributes to the dramatic and well documented decline of species-rich coastal forest areas along the Gulf of Mexico. Here, we present the results of a study of coastal forest stand dynamics in thirteen 400 m2 plots representing an elevation gradient of 0.58–1.1 m affected by tidal flooding and rising sea levels. We extended previously published data from 1992–2000 to 2005 to quantify the full magnitude of the 1998–2002 La Niña-associated drought. Populations of the dominant tree species, Sabal palmetto (cabbage palm), declined more rapidly during 2000–2005 than predicted from linear regressions based on the 1992–2000 data. Dramatic increases in Juniperus virginiana (Southern red cedar) and S. palmetto mortality during 2000–2005 as compared with 1995–2000 are apparently due to the combined effects of a major drought and ongoing sea-level rise. Additionally, coastal forest stands continued to decline in species richness with increased tidal flooding frequency and decreasing elevation. Stable isotope (H, O) analyses demonstrate that J. virginiana accesses fresher water sources more than S. palmetto. Carbon isotopes reveal increasing δ13C enrichment of S. palmetto and J. virginiana with increased tidal flooding and decreased elevation, demonstrating increasing water stress in both species. Coastal forests with frequent tidal flooding are unable to support species-rich forests or support regeneration of the most salt-tolerant tree species over time. Given that rates of sea-level rise are predicted to increase and periodic droughts are expected to intensify in the future due to global climate change, coastal forest communities are in jeopardy if their inland retreat is restricted.