Determining the changes in within- and between-species functional diversity in plant communities, and their contribution to overall species trait overlap, can enhance efforts at understanding mechanisms of species coexistence. However, little is known about how variation in species functional diversity influences variation in species trait overlap among contrasting environments. Here, we studied the understorey vegetation in a well-characterized 5000-year-old chronosequence involving 30 forested islands that differ greatly in size, soil fertility, and species diversity. Across this chronosequence we expected consistent changes in both within- and between-species functional diversity that would lead to decreasing overall species trait overlap with increasing successional age, species richness, understorey vegetation density and spatial heterogeneity of soil resources. For each island we measured specific leaf area (SLA) of each of ten individuals of each plant species present. Using a variance decomposition method, we partitioned the total community functional diversity of SLA on each island into within- and between-species functional diversity. Further, we estimated overall species trait overlap as the ratio of within-species functional diversity to total functional diversity. Using regression analyses we then explored relationships of within- and between-species functional diversity, and of overall species trait overlap, with several environmental variables across the 30 islands. Consistent with our hypotheses, overall species trait overlap decreased with successional age due to a statistically significant decrease in within-species functional diversity, and decreased with species richness due to a simultaneous decrease in within-species functional diversity and increase in between-species functional diversity. Against our predictions, overall species trait overlap increased in more competitive environments and did not change with increasing spatial heterogeneity of soil N or P. Synthesis: Our study suggests niche packing as a key mechanism for species coexistence in plant communities. Using SLA as an integrator of plant ecological strategy we show that community successional age and species richness are significantly linked to trait space distribution of plant individuals of boreal forest understorey vegetation and therefore to local species coexistence. Our results also suggest that the trait space of dominant and subordinate species may respond differently to local environmental variables.