1. Several ecological theories predict that species coexist by exploiting different resource niches, and therefore, more diverse communities should have greater resource uptake. Supporting evidence, however, is equivocal. Species with similar competitive abilities are predicted to coexist with little niche differentiation, suggesting that communities containing more functionally redundant species may be more diverse but with little impact on resource use. Likewise, high rates of seed dispersal often increase diversity, but the effect of this diversity on resource uptake is unknown.
2. I incorporate resource competition into a metacommunity model where communities differ in regional diversity and also in the dispersal and niche overlap (functional redundancy) of their constituent species. In this model, each species within the metacommunity is the optimal competitor in one or more patches, and the patches are linked by dispersal.
3. The model predicts that niche overlap and dispersal have similar and synergistic effects on local diversity, but opposite effects on resource use. Increasing niche overlap and dispersal causes an increase in local diversity to a critical point, after which local diversity crashes. However, increasing dispersal invariably decreases resource use, whereas increasing niche overlap increases resource use. Increasing the regional species pool causes the only consistently positive relationship between local diversity and function but becomes saturated at a local species richness of 2–3 species.
4. Synthesis. The distinct mechanisms that drive diversity in local communities can have different and even opposing effects on resource use. Understanding how dispersal and niche overlap structure diversity is critical to predicting the relationship between diversity and resource use. Distinguishing between these mechanisms should be a priority when attempting to understand the causes and consequences of diversity.