Water use efficiency (WUE) is central to the global cycles of water and carbon. However, whether increasing tree diversity in plantation can increase WUE remain poorly understood. Here, we conduct a forest biodiversity experiment with 32 tree species spread in 14 ha in subtropical China to assess the effects of neighboring tree diversity on foliar WUE of Cunninghamia lanceolata, a widespread tree plantation species in China. We measure foliar δ¹³C as the proxies of changes in intrinsic WUE. Folia P concentrations of focal trees increase with trait dissimilarities between focal trees and neighbors, and the increased foliar P concentrations improve foliar WUE of focal trees. This neighborhood complementarity effect on WUE is stronger under more shaded neighborhood. However, neighborhood biodiversity did not significantly affect foliar δ¹⁸O, a surrogate for stomatal conductance. These findings suggest that tree biodiversity increases WUE through the complementary usages of soil P between neighboring tree species.