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Abstract Forests harbor extensive biodiversity and act as a strong global carbon and nitrogen sink. Although enhancing tree diversity has been shown to mitigate climate change by sequestering more carbon and nitrogen in biomass and soils in manipulative experiments, it is still unknown how varying environmental gradients, such as gradients in resource availability, mediate the effects of tree diversity on carbon and nitrogen accrual in natural forests. Here, we use Canada’s National Forest Inventory data to explore how the relationships between tree diversity and the accumulation of carbon and nitrogen in tree biomass and soils vary with resource availability and environmental stressors in natural forests. We find that the positive relationship between tree functional diversity (rather than species richness) and the accumulation of carbon in tree biomass strengthens with increasing light and soil nutrient availability. Moreover, the positive relationship between tree functional diversity and the accumulation of carbon and nitrogen in both organic and mineral soil horizons is more pronounced at sites with greater water and nutrient availabilities. Our results highlight that conserving and promoting functionally diverse forests in resource-rich environments could play a greater role than in resource-poor environments in enhancing carbon and nitrogen sequestration in Canada’s forests.