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Abstract Topography affects abiotic conditions which can influence the structure, function and dynamics of ecological communities. An increasing number of studies have demonstrated biological consequences of fine‐scale topographic heterogeneity but we have a limited understanding of how these effects depend on the climate context.We merged high‐resolution (1 m²) data on topography and canopy height derived from airborne lidar with ground‐based data from 15 forest plots in Puerto Rico distributed along a precipitation gradient spanningc. 800–3,500 mm/year. Ground‐based data included species composition, estimated above‐ground biomass (AGB), and two key functional traits (wood density and leaf mass per area, LMA) that reflect resource‐use strategies and a trade‐off between hydraulic safety and hydraulic efficiency. We used hierarchical Bayesian models to evaluate how the interaction between topography × climate is related to metrics of forest structure (i.e. canopy height and AGB), as well as taxonomic and functional alpha‐ and beta‐diversity.Fine‐scale topography (characterized with the topographic wetness index, TWI) significantly affected forest structure and the strength (and in some cases direction) of these effects varied across the precipitation gradient. In all plots, canopy height increased with topographic wetness but the effect was much stronger in dry compared to wet forest plots. In dry forest plots, topographically wetter microsites also had higher levels of AGB but in wet forest plots, topographically drier microsites had higher AGB.Fine‐scale topography influenced functional composition but had only weak or non‐significant effects on taxonomic and functional alpha‐ and beta‐diversity. For instance, community‐weighted wood density followed a similar pattern to AGB across plots. We also found a marginally significant association between variation of wood density and topographic heterogeneity that depended on climate context.Synthesis. The effects of fine‐scale topographic heterogeneity on tropical forest structure and composition depend on the climate context. Our study demonstrates how a stronger integration of topographic heterogeneity across precipitation gradients could improve estimates of forest structure and biomass, and may provide insight to the ways that topography might mediate species responses to drought and climate change.