We used a functional trait-based approach to assess the impacts of aridity and shrub encroachment on the functional structure of Mediterranean dryland communities (functional diversity and community-weighted mean trait values [CWM]), and to evaluate how these functional attributes ultimately affect multifunctionality (i.e., the provision of several ecosystem functions simultaneously).Shrub encroachment (the increase in the abundance/cover of shrubs) is a major land cover change that is taking place in grasslands worldwide. Studies conducted on drylands have reported positive or negative impacts of shrub encroachment depending on the functions and the traits of the sprouting or non-sprouting shrub species considered.Functional diversity and CWM were equally important as drivers of multifunctionality responses to both aridity and shrub encroachment. Size traits (e.g., vegetative height or lateral spread) and leaf traits (e.g., specific leaf area and leaf dry matter content) captured the effect of shrub encroachment on multifunctionality with a relative high accuracy (r2=0.63). Functional diversity also improved the resistance of multifunctionality along the aridity gradient studied.Maintaining and enhancing functional diversity in plant communities may help to buffer negative effects of ongoing global environmental change on dryland multifunctionality.