•Vegetation gradients can differ in their phenologies, reflecting functional traits.•Rainfall was negatively related to leaf fall along a savanna–seasonal forest gradient.•Savanna species showed drought tolerance strategies.•Transition and SDTF vegetations had similar leaf strategies (drought avoidance). Vegetation gradients, such as those between savanna and seasonally dry tropical forest (SDTF) vegetations, may experience nearly identical macroclimatic conditions but still differ because of local ecological filters selecting for distinct plant functional aspects related to water storage and use. We examined how leaf phenology, water potential, wood density, and wood saturated water content varied seasonally along a savanna, transition, and SDTF vegetation gradient at the eastern border of the Chapada Diamantina Highlands, Brazil. We monitored the leaf phenologies of 523 individuals of 48 woody species (20 savanna, 14 transition, and 14 SDTF species) for two years. We identified four phenological groups: brevideciduous, deciduous, evergreen (EG) plants having continuous growth, and evergreen plants having seasonal growth. Deciduous species were found throughout the gradient, while EG species accounted for more than 80% of relative density in savanna areas. Precipitation was negatively related to leaf fall for all phenological groups, and positively related for leaf flushing in deciduous species. More than 80% of all species exhibited wood densities between 0.50 and 0.91 g cm−3. The first principal component explained 77.64% of the observed variance, associated with wood saturated water content, water potential, and wood density. All of the savanna species were distributed along the positive axis of the principal component analysis as compared to SDTF species. We demonstrated that the effects of water limitations along the gradient were critical to the selection of functional traits associated with water-use strategies and expressive deciduousness in SDTF vegetation, interpreted as drought avoidance strategies. Display omitted .