AbstractRiparian trees are critically important for maintaining the ecological function of freshwater ecosystems. Globally, anthropogenic changes to water regimes are impacting the health and distribution of riparian trees. Understanding the physiological constraints on the distribution of riparian tree species in relation to the water regime is essential for informed water resource management that seeks to limit impacts on riparian trees. To fill an identified knowledge gap for the Fitzroy River, a significant river in the wet–dry tropics of north‐western Australia, we used a trait‐based approach to characterise nine common riparian tree species in relation to their distribution along a hydrological gradient. We assessed key functional traits related to drought and flood flows. Leaf mass per unit area (LMA), leaf dry matter content (LDMC), foliar carbon content (% C) and the ratio of carbon to nitrogen (C:N) are broadly related to plant productivity and durability and may reflect resistance to fluvial stress. Traits related to water availability were stem specific density (SSD), mean xylem vessel diameter and xylem vessel density, as well as foliar δ13C which is related to water use efficiency, and leaf osmotic potential at full hydration (π100) as a measure of drought tolerance. We found that π100, δ13C and SSD values reflected species hydrological habitat preferences, with higher δ13C values and lower π100 for species distributed in the drier floodplain habitats, compared with species constrained to the riverbank. Low SSD values for species close to the riverbank may be indicative of aerenchyma tissue in response to flooding. Differences in leaf trait values were primarily attributed to differences between evergreen Myrtaceous and deciduous non‐Myrtaceous species, rather than hydrological habitat preferences. LMA was greatest for the Myrtaceous study species, with deciduous non‐Myrtaceous species associated with wetter habitats having the lowest values. The physiology of riparian trees in northern Australia is not well described for the majority of species. Our study provides insight into plant functional strategies in response to both flooding and drought and is a critical step in understanding plant responses to future water‐take scenarios to support evidence‐based decision making.