Environmental filtering and limiting similarity are those locally acting processes that influence community structure. These mechanisms acting on the traits of species result in trait convergence or divergence within the communities. The role of these processes might change along environmental gradients, and it has been conceptualised in the stress-dominance hypothesis, which predicts that the relative importance of environmental filtering increases and competition decreases with increasing environmental stress. Analysing trait convergence and divergence in lake phytoplankton assemblages, we studied how the concepts of 'limiting similarity' versus 'environmental filtering' can be applied to these microscopic aquatic communities, and how they support or contradict the stress-dominance hypothesis. Using a null model approach, we investigated the divergence and convergence of phytoplankton traits along environmental gradients represented by canonical axes of an RDA. We used Rao's quadratic entropy as a measure of functional diversity and calculated effect size (ES) values for each sample. Negative ES values refer to trait convergence, i.e., to the higher probability of the environmental filtering in community assembly, while positive values indicate trait divergence, stressing the importance of limiting similarity (niche partitioning), that is, the competition between the phytoplankters. Our results revealed that limiting similarity and environmental filtering may operate simultaneously in phytoplankton communities, but these assembly mechanisms influenced the distribution of phytoplankton traits differently, and the effects show considerable changes along with the studied scales. Studying the changes of ES values along with the various scales, our results partly supported the stress-dominance hypothesis, which predicts that the relative importance of environmental filtering increases and competition decreases with increasing environmental stress.