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Abstract: Functional trait approaches have greatly improved the mechanistic understanding of the impacts of biodiversity in ecosystem. We evaluated how hydrological gradients (i.e., soil water content and elevation) affected the taxonomic diversity, functional identity, and functional diversity and assessed how changes in these measures of diversity ultimately drove variations in above‐ground biomass (AGB). Results showed that a combination of hydrological gradients and functional trait composition (i.e., the community weighted means, the single‐trait functional diversity and the multiple‐trait functional diversity) better explained variations (40.8%) of AGB. No significant relationships between taxonomic diversity and AGB were observed. The dominant species became taller with thicker stem, and co‐occurring species showed greater divergent distribution of stem diameter towards higher soil water content. As elevation increased, the dominant plant had thinner leaves with later onset of flowering and longer flowering duration, and co‐occurring species showed less divergent distribution of lamina thickness and leaf dry‐mass content. Our results highlighted that the positive biodiversity–ecosystem functioning relations were largely attributed to the co‐operations of selection and complementary effects, as evidences showed that the dominant trait values (i.e., community weighted mean of shoot height) and trait diversity (i.e., functional evenness) improved biomass production of wetland plants. [ABSTRACT FROM AUTHOR]