Short-term experimental studies provided evidence that plant diversity increases ecosystem resilience and resistance to drought events, suggesting diversity to serve as a nature-based solution to address climate change. However, it remains unclear whether the effects of diversity are momentary or still hold over the long term in natural forests to ensure that the sustainability of carbon sinks. By analyzing 57 years of inventory data from dryland forests in Canada, we show that productivity of dryland forests decreased at an average rate of 1.3% per decade, in concert with the temporally increasing temperature and decreasing water availability. Increasing functional trait diversity from its minimum (monocultures) to maximum value increased productivity by 13%. Our results demonstrate the potential role of tree functional trait diversity in alleviating climate change impacts on dryland forests. While recognizing that nature-based climate mitigation (e.g., planting trees) can only be partial solutions, their long-term (decadal) efficacy can be improved by enhancing functional trait diversity across the forest community.