Spatial gradients in mangrove tree height in barrier islands of Belize are associated with nutrient deficiency and sustained flooding in the absence of a salinity gradient. While nutrient deficiency is likely to affect many parameters, here we show that addition of phosphorus (P) to dwarf mangroves stimulated increases in diameters of xylem vessels, area of conductive xylem tissue and leaf area index (LAI) of the canopy. These changes in structure were consistent with related changes in function, as addition of P also increased hydraulic conductivity (Ks), stomatal conductance and photosynthetic assimilation rates to the same levels measured in taller trees fringing the seaward margin of the mangrove. Increased xylem vessel size and corresponding enhancements in stem hydraulic conductivity in P fertilized dwarf trees came at the cost of enhanced midday loss of hydraulic conductivity and was associated with decreased assimilation rates in the afternoon. Analysis of trait plasticity identifies hydraulic properties of trees as more plastic than those of leaf structural and physiological characteristics, implying that hydraulic properties are key in controlling growth in mangroves. Alleviation of P deficiency, which released trees from hydraulic limitations, reduced the structural and functional distinctions between dwarf and taller fringing tree forms of Rhizophora mangle.