Reversing anthropogenic impacts on habitat structure is frequently successful through restoration, but the mechanisms linking habitat change, community reassembly and recovery of ecosystem functioning remain unknown. We test for the influence of edge effects and matrix habitat restoration on the reassembly of dung beetle communities and consequent recovery of dung removal rates across tropical forest edges. Using path modelling, we disentangle the relative importance of community-weighted trait means and functional trait dispersion from total biomass effects on rates of dung removal. Community trait composition and biomass of dung beetle communities responded divergently to edge effects and matrix habitat restoration, yielding opposing effects on dung removal. However, functional dispersion—used in this study as a measure of niche complementarity—did not explain a significant amount of variation in dung removal rates across habitat edges. Instead, we demonstrate that the path to functional recovery of these altered ecosystems depends on the trait-mean composition of reassembling communities, over and above purely biomass-dependent processes that would be expected under neutral theory. These results suggest that any ability to manage functional recovery of ecosystems during habitat restoration will demand knowledge of species' roles in ecosystem processes.