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Because of their steep gradients in abiotic and biotic factors, mountains offer an ideal setting to illuminate the mechanisms that underlie patterns of species distributions and community assembly. We compared the composition of taxonomically and functionally diverse fungal communities in soils along five elevational gradients in mountains of the Neo‐ and Palaeotropics (northern Argentina, southern Brazil, Panama, Malaysian Borneo and Papua New Guinea). Both the richness and composition of soil fungal communities reflect environmental factors, particularly temperature and soil pH, with some shared patterns among neotropical and palaeotropical regions. Community dynamics are characterized by replacement of species along elevation gradients, implying a relatively narrow elevation range for most fungi, which appears to be driven by contrasting environmental preferences among both functional and taxonomic groups. For functional groups dependent on symbioses with plants (especially ectomycorrhizal fungi), the distribution of host plants drives richness and community composition, resulting in important differences in elevational patterns between neotropical and palaeotropical montane communities. The pronounced compositional and functional turnover along elevation gradients implies that tropical montane forest fungi will be sensitive to climate change, resulting in shifts in composition and functionality over time. [ABSTRACT FROM AUTHOR]