Plant functional traits vary both along environmental gradients and among species occupying similar conditions, creating a challenge for the synthesis of functional and community ecology. We present a trait-based approach that provides an additive decomposition of species’ trait values into alpha and beta components: beta values refer to a species’ position along a gradient defined by community-level mean trait values; alpha values are the difference between a species’ trait values and the mean of co-occurring taxa. In woody plant communities of coastal California, beta trait values for specific leaf area, leaf size, wood density and maximum height all covary strongly, reflecting species distributions across a gradient of soil moisture availability. Alpha values, on the other hand, are generally not significantly correlated, suggesting several independent axes of differentiation within communities. This trait-based framework provides a novel approach to integrate functional ecology and gradient analysis with community ecology and coexistence theory.