In some internal valleys of the northern Andes, precipitation at treeline elevation is seasonal, with one or two dry periods that could exert a strong control on tree seedling survival. However, little is known about (1) the severity of the dry periods, due to a lack of climate data, or (2) the effect of drought on tree seedling demographic dynamics and how this is modulated by local plant interactions in these tropical-alpine ecosystems. We studied annual precipitation variation and seedling demography and ecophysiology in relation to microclimate and neighboring plants in a dry treeline ecotone at 3100 m a.s.l in the Venezuelan Andes. We selected seedlings of the dominant tree species Cybianthus marginatus and Clusia multiflora at three sites, each with three adjacent 10 × 10-m plots within the forest, forest border, and páramo. For both species, seedling density was zero in the páramo and did not differ between border and forest. Growth rates were low for both species, but higher for Cybianthus in the border than in the forest. Survival rates were high in both environments. Low assimilation and transpiration rates were found in both species regardless of the environment. The spatial association of seedlings with moisture-regulating elements such as mosses, ferns and basal rosettes may indicate a benefit of better hydric conditions in their neighborhood. Our study shows a strong limitation for tree establishment in the páramo, but high rates of survival at the edge of the forest. This suggests a scenario of slow potential forest expansion at this tropical treeline, tree cover advancing in a closed front by the successive formation of forest-edge vegetation allowing tree seedling establishment outside of the forest.