Droughts are predicted to increase in both frequency and intensity by the end of the 21st century, but ecosystem response is not expected to be uniform. At the landscape scale, ecosystem response to drought is highly heterogeneous. Here we assess the importance of the hill-to-valley hydrologic gradient in shaping vegetation hydraulic properties related to drought resistance for three locations across a rainfall seasonality gradient in South America. For this, we use hydraulic traits related to xylem resistance to embolism and compare the functional composition and diversity of tree communities. We show that the hydrologic gradient systematically selects for community assemblages that are more vulnerable to embolism in valleys, regardless of rainfall. Under the same rainfall regime, diversity in resistance to embolism is higher on hills than valleys, suggesting that strategies to cope with drought are more important on hills. With increasing seasonality, diversity in embolism resistance increases on hills and decreases in valleys. Our results show that differential groundwater access from hilltops to valleys select for distinctive hydraulic properties, potentially explaining species turnover along topographical gradients. Incorporating this relationship might improve the representation of vegetation in climate models and the prediction of how different communities will respond to extreme droughts.