Major environmental gradients co-vary with elevation and have been a longstanding natural tool allowing ecologists to study global diversity patterns at smaller scales, and to make predictions about the consequences of climate change. These analyses have traditionally studied taxonomic diversity, but new functional diversity approaches may provide a deeper understanding of the ecological mechanisms driving species assembly. We examined lichen taxonomic and functional diversity patterns on 195 plots (200 m²) together with forest structure along an elevational gradient of 1,000 m in a temperate low mountain range (Bohemian Forest, Germany). Along this elevation gradient temperature decreased and precipitation increased, two macroclimatic variables critical for lichens. Elevation was more important than forest structure in driving taxonomic and functional diversity. While species richness increased with elevation, functional diversity decreased and revealed that community patterns shift with elevation from random to clustered, reflecting selection for key shared traits. Higher elevations favored species with a complex growth form (which takes advantage of high moisture) and asexual reproductive mode (facilitating establishment under low temperature conditions). Our analysis highlights the need to examine alternative forms of diversity and opens the avenue for community predictions about climate change. For a regional scenario with increasing temperature and decreasing availability of moisture, we expect a loss of specialized species with a complex growth form and those with vegetative organs at higher elevations in low mountain ranges in Europe.This article is protected by copyright. All rights reserved.