Predicting drought responses of individual trees in tropical forests remains challenging, in part because trees experience drought differently depending on their position in spatially heterogeneous environments. Specifically, topography and the competitive environment can influence the severity of water stress experienced by individual trees, leading to individual-level variation in drought impacts. A drought in 2015 in Puerto Rico provided the opportunity to assess how drought response varies with topography and neighborhood crowding in a tropical forest. In this study, we integrated 3 years of annual census data from the El Yunque Chronosequence plots with measurements of functional traits and LiDAR-derived metrics of microsite topography. We fit hierarchical Bayesian models to examine how drought, microtopography, and neighborhood crowding influence individual tree growth and survival, and the role functional traits play in mediating species’ responses to these drivers. We found that while growth was lower during the drought year, drought had no effect on survival, suggesting that these forests are fairly resilient to a single-year drought. However, growth response to drought, as well as average growth and survival, varied with topography: tree growth in valley-like microsites was more negatively affected by drought, and survival was lower on steeper slopes while growth was higher in valleys. Neighborhood crowding reduced growth and increased survival, but these effects did not vary between drought/non-drought years. Functional traits provided some insight into mechanisms by which drought and topography affected growth and survival. For example, trees with high specific leaf area grew more slowly on steeper slopes, and high wood density trees were less sensitive to drought. However, the relationships between functional traits and response to drought and topography were weak overall. Species sorting across microtopography may drive observed relationships between average performance, drought response, and topography. Our results suggest that understanding species’ responses to drought requires consideration of the microenvironments in which they grow. Complex interactions between regional climate, topography, and traits underlie individual and species variation in drought response.