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Tropical forests store large amounts of carbon and high biodiversity, but are being degraded at alarming rates. The emerging global Forest and Landscape Restoration (FLR) agenda seeks to limit global climate change by removing carbon dioxide from the atmosphere through the growth of trees. In doing so, it may also protect biodiversity as a free cobenefit, which is vital given the massive shortfall in funding for biodiversity conservation. We investigated whether natural forest regeneration on abandoned pastureland offers such cobenefits, focusing for the first time on the recovery of taxonomic diversity (TD), phylogenetic diversity (PD) and functional diversity (FD) of trees, including the recovery of threatened and endemic species richness, within isolated secondary forest (SF) fragments. We focused on the globally threatened Brazilian Atlantic Forest, where commitments have been made to restore 1 million hectares under FLR. Three decades after land abandonment, regenerating forests had recovered ~20% (72 Mg/ha) of the above-ground carbon stocks of a primary forest (PF), with cattle pasture containing just 3% of stocks relative to PFs. Over this period, SF recovered ~76% of TD, 84% of PD and 96% of FD found within PFs. In addition, SFs had on average recovered 65% of threatened and ~30% of endemic species richness of primary Atlantic forest. Finally, we find positive relationships between carbon stock and tree diversity recovery. Our results emphasize that SF fragments offer cobenefits under FLR and other carbon-based payments for ecosystem service schemes (e.g. carbon enhancements under REDD+). They also indicate that even isolated patches of SF could help to mitigate climate change and the biodiversity extinction crisis by recovering species of high conservation concern and improving landscape connectivity., (© 2019 John Wiley & Sons Ltd.)