Cities are vulnerable to droughts and heatwaves due to the decline in permeable green spaces and the emergence of heat islands. To tackle these environmental challenges, many cities adopted ambitious tree-planting initiatives. However, tree tolerance to climate extremes is overlooked even though physiological and growth limitations jeopardize ecosystem services provision. We assessed the responses of Tipuana tipu to the 2013/2014 summer drought in São Paulo, Brazil. We sampled trees in a park and streets and assessed how tree-ring δ13C and growth responses to drought differ. The Regression Tree shows that microhabitats exert the strongest control on tree-ring δ13C seconded by drought. δ13C is on average 1.0‰ higher in streets where growth rate is 60% higher than in the park. Similarly, δ13C increased by up to 0.9‰ during the drought when growth increased by up to 45% in both sites. This positive association between δ13C and growth rate (R2 = 0.78) indicates that growth is limited by assimilation rate. Assimilation is up to 15% higher in streets and increased by up to 10% during the drought because of higher incident sunlight and air temperature. Thus, T. tipu is a drought-tolerant species with potential to contribute to (sub)tropical cities, thriving in a warming climate.