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Abstract Does drought stress in temperate grasslands alter the relationship between plant structure and function? Here we report data from an experiment focusing on growth form and species traits that affect the critical functions of water‐ and nutrient‐use efficiency in prairie and pasture plant communities. A total of 139 individuals of 12 species (11 genera and four families) were sampled in replicated plots maintained for three years across a 520 km latitudinal gradient in the Pacific Northwest, USA. Rain exclusion did not alter the interspecific relationship between foliar traits and stoichiometry or intrinsic water‐use efficiency (iWUE). Rain exclusion reduced iWUE in grasses, an effect was primarily species‐specific, although leaf morphology, life history strategy, and phylogenetic distance predicted iWUE for all 12 species when analyzed together. Variation in specific leaf area explained most of the variation in iWUE between different functional groups, with annual forbs and annual grasses at opposite ends of the resource‐use spectrum. Our findings are consistent with expected trait‐driven tradeoffs between productivity and resource‐use efficiency, and provide insight into strategies for the sustainable use and conservation of temperate grasslands.