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To address these knowledge gaps, we estimated the low‐density growth rates of populations in drought conditions with low neighbour cover and in ambient conditions with average neighbour cover for 82 species in six grassland communities across the Central Plains and Southwestern United States. We assessed the relationship between population tolerance to drought and resistance to competition and determined if this relationship was consistent across a precipitation gradient. We also tested whether population growth rates could be predicted using plant functional traits.

Across six sites, we observed a positive correlation between low‐density population growth rates in drought and in the presence of interspecific neighbours. This positive relationship was particularly strong in the grasslands of the northern Great Plains but weak in the most xeric grasslands. High leaf dry matter content and a low (more negative) leaf turgor loss point were associated with high population growth rates in drought and with neighbours in most grassland communities.

Synthesis: A better understanding of how both biotic and abiotic factors impact population fitness provides valuable insights into how grasslands will respond to extreme drought. Our results advance plant strategy theory by suggesting that drought tolerance increases population resistance to interspecific competition in grassland communities. However, this relationship is not evident in the driest grasslands, where above‐ground competition is likely less important. Leaf dry matter content and turgor loss point may help predict which populations will establish and persist based on local water availability and neighbour cover, and these predictions can be used to guide the conservation and restoration of biodiversity in grasslands.