In many terrestrial habitats, plants experience temporal heterogeneity in water availability both at the intra and inter annual scales, creating dry-wet pulse scenarios. This variability imposes two concomitant challenges for plants: surviving droughts and efficiently utilizing water when it becomes available, whose responses are closely interconnected. To date, most studies have focused on the response to drought following static designs that do not consider consequences of repeated transitions from one state to the other. In principle, different dry-wet pulse scenarios among years may differentially affect species performance, plant strategies, and promote coexistence through temporal niche separation. We predicted that short frequent droughts would disfavor drought-avoidant species, as rapid leaf loss and production could disrupt their carbon balance, whereas tolerant species, which maintain carbon gain during droughts, should thrive in such conditions. Prolonged droughts might harm tolerant species by causing severe cavitation. We assessed the survival and growth responses of seedlings from 19 tropical dry forest tree species to simulated natural dry-wet pulse scenarios, examining their relationships with the continuum of species functional strategies under field conditions, and used greenhouse experiments to accompany the field experiment. As expected, different dry-wet pulse scenarios favored different plant functional strategies. Contrary to predictions, the most tolerant outperformed the most avoiders under all drought scenarios, while rapid water-exploiters thrived under non-drought conditions. The superiority of tolerant over avoider species was reverted in the greenhouse, suggesting that in addition to physiology, the fate of species may depend on extrinsic factors as natural enemies. The interplay between the marked variability of dry-wet pulse scenarios across the years and the diversity of water use strategies may contribute to species coexistence in the tropical dry forests. This research is relevant in predicting changes in dominant tree species under future climate scenarios characterized by increased temporal variation in water availability.