Water stress represents a significant threat to the biodiversity and structure of the Amazon rainforest, affecting community composition, ecosystem functioning, and the physiological responses of species. Soil moisture reduction can alter species dominance patterns. However, the long-term effects of water stress on tree diversity, composition, and functional traits are still poorly understood. To address these knowledge gaps, we conducted a two-decade precipitation exclusion experiment (TFE) in eastern Amazonia to evaluate the impacts of prolonged soil moisture reduction on taxonomic diversity, species composition, and species’ functional trait adjustments. We assessed changes in species richness, diversity, species turnover, and increased community dissimilarity compared to the control plot. Additionally, we investigated whether tree species adjusted their functional traits in response to long-term soil water deficit and whether these adjustments varied among species. Our findings revealed that prolonged drought significantly reduced tree diversity, with emergent trees suffering the most pronounced declines. This change increased community dissimilarity, mainly driven by reduced abundance of emergent trees and greater species turnover under water stress. However, contrary to expectations, there was no clear shift towards species associated with drier climates. Furthermore, functional trait adjustments were limited, with species-specific responses in predawn water potential and wood density, but no unidirectional trend in functional trait changes. Consequently, no major shift in the functional space of trees was detected in response to the TFE. These results highlight the vulnerability of emergent trees to long-term drought and underscore the complexity of species-specific functional responses under water limitation.