Multiple niche‐based processes including conspecific negative density dependence (CNDD) determine plant regeneration and community structure. We ask how interspecific and intraspecific density‐dependent interactions relate to plant life histories and associated functional traits. Using hierarchical models, we analysed how such interactions affected first‐year survival of seedling recruits of 175 species in a tropical forest, and how species abundances and functional traits are related to interspecific variation in density‐dependent effects. Conspecific seedling neighbour effects prevailed over the effects of larger conspecific and all heterospecific neighbours. Tolerance of seedling CNDD enhanced recruit survival and subsequent abundance, all of which were greater among larger seeded, slow‐growing and well‐defended species. Niche differentiation along the growth–survival trade‐off and tolerance of seedling CNDD strongly correlated with regeneration success, with manifest consequences for community structure. The ability of larger seeded species to better tolerate CNDD suggests a novel mechanism for CNDD to contribute to seed‐size variation and promote species coexistence through a tolerance–fecundity trade‐off.