The conservation of ecosystems and their biodiversity has numerous co-benefits, both for local societies and for humankind worldwide. While the co-benefit of climate change mitigation through so called blue carbon storage in coastal ecosystems has raised increasing interest in mangroves, the relevance of multifaceted biodiversity as a driver of carbon storage remains unclear. Sediment salinity, taxonomic diversity, functional diversity and functional distinctiveness together explain 69%, 69%, 27% and 61% of the variation in above- and belowground plant biomass carbon, sediment organic carbon and total ecosystem carbon storage, respectively, in the Sundarbans Reserved Forest. Functional distinctiveness had the strongest explanatory power for carbon storage, indicating that blue carbon in mangroves is driven by the functional composition of diverse tree assemblages. Protecting and restoring mangrove biodiversity with site-specific dominant species and other species of contrasting functional traits would have the co-benefit of maximizing their capacity for climate change mitigation through increased carbon storage.