The response of small understory trees to long‐term drought is vital in determining the future composition, carbon stocks and dynamics of tropical forests. Long‐term drought is, however, also likely to expose understory trees to increased light availability driven by drought‐induced mortality. Relatively little is known about the potential for understory trees to adjust their physiology to both decreasing water and increasing light availability. We analysed data on maximum photosynthetic capacity (J max, V cmax), leaf respiration (R leaf), leaf mass per area (LMA), leaf thickness and leaf nitrogen and phosphorus concentrations from 66 small trees across 12 common genera at the world’s longest running tropical rainfall exclusion experiment and compared responses to those from 61 surviving canopy trees. Small trees increased J max, V cmax, R leaf and LMA (71%, 29%, 32%, 15% respectively) in response to the drought treatment, but leaf thickness and leaf nutrient concentrations did not change. Small trees were significantly more responsive than large canopy trees to the drought treatment, suggesting greater phenotypic plasticity and resilience to prolonged drought, although differences among taxa were observed. Our results highlight that small tropical trees have greater capacity to respond to ecosystem level changes and have the potential to regenerate resilient forests following future droughts.