Temperatures over the Arctic region are increasing at three times the rate of the global average. Consequently, Arctic vegetation is changing and trees are encroaching into the tundra. In this study, we examine the establishment and growth of mountain birch (
Betula pubescens
ssp.
tortuosa
), which forms the treeline in subarctic Europe, and its impact on community composition across the treeline ecotone nearby Abisko, Sweden. Birch advancement along elevational gradients was studied by comparing data collected in 2016 with data collected 10 and 15 years previously. Species identity, cover, and phylogenetic relatedness were used to assess the impact of birch encroachment on community composition. Our results show that birch occurrence above the treeline did not affect plant community composition, probably owing to the observed lack of significant growth due to herbivore browsing, nitrogen limitation, or a reduction in snow cover. Independent of birch performance, the tundra community structure shifted toward a novel community dissimilar from the forest plant community found below the treeline. Taken together, our findings are explained by species‐specific responses to climate change, rather than by a linear forest advance. Future treeline advancements are likely more restricted than previously expected.