A 4-year fertilization experiment with nitrogen (N) and phosphorus (P) was carried out in natural gaps of a subtropical forest in northeastern Argentina. Saplings of six dominant canopy species differing in shade tolerance were grown in five control and five N + P fertilized gaps. Hydraulic architectural traits such as wood density, the leaf area to sapwood area ratio (LA : SA), vulnerability to cavitation (P50) and specific and leaf-specific hydraulic conductivity were measured, as well as the relative growth rate, specific leaf area (SLA) and percentage of leaf damage by insect herbivores. Plant growth rates and resistance to drought-induced embolisms increased when nutrient limitations were removed. On average, the P50 of control plants was -1.1 MPa, while the P50 of fertilized plants was -1.6 MPa. Wood density and LA : SA decreased with N + P additions. A trade-off between vulnerability to cavitation and efficiency of water transport was not observed. The relative growth rate was positively related to the total leaf surface area per plant and negatively related to LA : SA, while P50 was positively related to SLA across species and treatments. Plants with higher growth rates and higher total leaf area in fertilized plots were able to avoid hydraulic dysfunction by becoming less vulnerable to cavitation (more negative P50). Two high-light-requiring species exhibited relatively low growth rates due to heavy herbivore damage. Contrary to expectations, shade-tolerant plants with relatively high resistance to hydraulic dysfunction and reduced herbivory damage were able to grow faster. These results suggest that during the initial phase of sapling establishment in gaps, species that were less vulnerable to cavitation and exhibited reduced herbivory damage had faster realized growth rates than less shade-tolerant species with higher potential growth rates. Finally, functional relationships between hydraulic traits and growth rate across species and treatments were maintained regardless of soil nutrient status.