There is strong trait dependence in species-level responses to environmental change and their cascading effects on ecosystem functioning. However, there is little understanding of whether intraspecific trait variation (ITV) can also be an important mechanism mediating environmental effects on ecosystem functioning. This is surprising, given that global change processes such as habitat fragmentation and the creation of forest edges drive strong trait shifts within species. On 20 islands in the Thousand Island Lake, China, we quantified intraspecific leaf trait shifts of a widely distributed shrub species, Vaccinium carlesii, in response to habitat fragmentation. Using a reciprocal transplant decomposition experiment between forest edge and interior on 11 islands with varying areas, we disentangled the relative effects of intraspecific leaf trait variation versus altered environmental conditions on leaf decomposition rates in forest fragments. We found strong intraspecific variation in leaf traits in response to edge effects, with a shift toward recalcitrant leaves with low specific leaf area and high leaf dry matter content from forest interior to the edge. Using structural equation modeling, we showed that such intraspecific leaf trait response to habitat fragmentation had translated into significant plant afterlife effects on leaf decomposition, leading to decreased leaf decomposition rates from the forest interior to the edge. Importantly, the effects of intraspecific leaf trait variation were additive to and stronger than the effects from local environmental changes due to edge effects and habitat loss. Our experiment provides the first quantitative study showing that intraspecific leaf trait response to edge effects is an important driver of the decrease in leaf decomposition rate in fragmented forests. By extending the trait-based response-effect framework toward the individual level, intraspecific variation in leaf economics traits can provide the missing functional link between environmental change and ecological processes. These findings suggest an important area for future research on incorporating ITV to understand and predict changes in ecosystem functioning in the context of global change.