Mixed–species forests are proposed as an adaptation strategy to cope with drought stress. However, evidence suggest that increasing tree species richness does not consistently enhance tree growth responses to drought. Moreover, tree diversity effects under unprecedented multiyear droughts remain uncertain. This calls for a better understanding of the mechanisms at stake. Here, we used a network of planted tree diversity experiments to investigate how drought–induced growth responses of individual trees are influenced by neighborhood tree diversity and the functional traits of the focal tree species. We analyzed tree cores (948 trees across 16 species) from nine experiments across Europe featuring gradients of tree species richness (1–6 species), which experienced severe droughts in recent years. Radial growth response to drought was quantified as tree–ring biomass increment using X–ray computed tomography. We applied hydraulic trait-based growth models to analyze single–year drought responses across all sites and site–specific responses during consecutive drought years for six sites as a function of neighborhood tree diversity. The large variability in tree growth responses to a single–year drought was partially explained by the hydraulic safety margin (representing species′ drought tolerance) of the focal species and drought intensity, but independent of neighborhood species richness or functional trait diversity. However, tree diversity effects on growth responses strengthened during consecutive drought years, with contrasting direction of site–specific tree diversity effects (both positive and negative). This indicated opposing pathways of diversity effects under consecutive drought events, which might result from competitive release or greater water consumption in diverse mixtures. We conclude that tree diversity effects on growth responses to single–year droughts may differ considerably from responses to consecutive drought years. Our study highlights the need to consider trait–based approaches (specifically, hydraulic traits) and tree neighborhood scale processes to understand the multifaceted growth responses of tree mixtures under prolonged multi–year drought stress.