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The seed-to-seedling transition constitutes a critical bottleneck in the life history of plants and represents a major determinant of species composition and abundance. However, we have surprisingly little knowledge regarding the forces driving this ontogenetic transition. Here we utilize information regarding organismal function to investigate the strength of intra- and interspecific negative density dependence during the seed-to-seedling transition in Puerto Rican tree species. Our analyses were implemented at individual sites and across an entire 16-ha forest plot, spanning 6 years. The functional richness of seedling assemblages was significantly lower than expected given the seed assemblages, but the functional evenness was significantly higher than expected, indicating the simultaneous importance of constraints on the overall phenotypic space and trait differences for successful transitions from seed to seedling. The results were consistent across years. Within species, we also found evidence for strong intraspecific negative density dependence, where the probability of transition was proportionally lower when in a site with high conspecific density. These results suggest that filtering of similar phenotypes across species and strong negative density dependence within and among species are simultaneously driving the structure and dynamics of tropical tree assemblages during this critical life-history transition.