Tropical regions have provided new insights into how ecological communities are assembled. In dry coastal communities, water stress has been hypothesized to determine plant assembly structure by favoring preadapted lineages from neighboring ecosystems, consistent with functional clustering. However, it is unclear whether this hypothesis is sufficient to explain how coastal communities in tropical ecosystems are assembled. Here, we test whether water stress or other factors drive community assembly in woody plant communities across the coastal zone of Brazil, a tropical ecosystem. We characterized functional and phylogenetic structures of these communities and determined the underlying environmental factors (e.g., water stress, historical climate stability, edaphic constraints, and habitat heterogeneity) that drive their community assembly. Assemblages of coastal woody species show geographically varied patterns, including stochastic arrangements, clustering, and overdispersion of species relative to their traits and phylogenetic relatedness. Topographic complexity, water vapor pressure, and soil nutrient availability best explained the gradient in the functional structure. Water deficit, water vapor pressure, and soil organic carbon were the best predictors of variation in phylogenetic structure. Our results support the water-stress conservatism hypothesis on functional and phylogenetic structure, as well as the effect of habitat heterogeneity on functional structure and edaphic constraints on functional and phylogenetic structure. These effects are associated with increased phenotypic and phylogenetic divergence of woody plant assemblages, which is likely mediated by abiotic filtering and niche opportunities, suggesting a complex pattern of ecological assembly.