Climate and environmental heterogeneity are currently discussed as the most important drivers of plant diversity along altitudinal gradients. Compared to functional diversity, taxonomic diversity has received much more attention in research on altitudinal gradients, although functional diversity may provide more information on the ecological mechanisms shaping plant diversity. We assessed the importance of climatic and environmental heterogeneity as drivers of functional diversity in relation to altitude in the central Alborz Mountains, Iran. We sampled 132 vegetation plots along two altitudinal transects. Plant traits including life history, growth form, stem‐leaf ratio, spinescence, hairiness, leaf consistency, dispersal type and plant height were recorded. Functional diversity was measured as functional richness, Rao's quadratic entropy, and their standardized effect sizes (SESs). In general, functional diversity decreased with altitude. The decrease in observed functional diversity was related to the decrease in taxonomic richness. SESs of functional diversity showed contrasting trends, depending on transect and index. At both transects, climatic stress best explained the variation in observed and expected functional diversity. Harsh climatic conditions at higher altitudes decreased the number of species and thus the functional trait space. Environmental heterogeneity played only a minor role for shaping functional diversity. We expect this effect to be due to the length of the sampled altitudinal transects. With increasing length, small‐scale drivers become less effective. The two transects favoured different environmental drivers, meaning that transferability of single studies could be difficult.