Understanding plant hydraulic functioning and water balance during drought has become key in predicting species survival and recovery. However, the insightful studies that couple physiological and morphological attributes do not exist in many ecosystems, such as the vulnerable Tropical Montane Cloud Forests (TMCF). In this study, we evaluate drought resistance and recovery for saplings for five tree species spanning deciduous to evergreen habits from a Mexican TMCF. Methods Drought treatments withheld water until plants reached species-specific P50 or P88 values (pressures required to induce a 50 or 88 percent loss in hydraulic conductivity), at which point they were rewatered. Drought resistance were considered within the isohydric-anisohydric framework and compared to leaf gas exchange, water status, pressure-volume curves, specific leaf area, and stomatal density. Results TMCF species closed stomata well before significant losses in hydraulic conductivity (isohydric). Yet, despite the coordination of these traits, they did not predict how long it took species to reach critical hydraulic thresholds. Instead, maximum photosynthesis rates explained these times reinforcing the linkage between hydraulic and carbon dynamics. Despite varying hydraulic conductivities, stomatal responses, and times to hydraulic thresholds, all study plants except for two individuals (out of 60) recovered following rewatering. The recovery of photosynthesis and stomatal conductance was explained by the P50 values and isohydry. Conclusions This study raises new questions surrounding drought management strategies, recovery processes, and how lethal thresholds are defined. Further studies need to consider the role of water and carbon balance in allowing for both survival and recovery to drought.