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To understand the effects of invasive species on soil hydraulic properties is a challenging task for Neotropical dry ecosystems because the relative paucity of knowledge of linkages between functional traits of species in response to drought conditions and land-cover transformation contexts. We tested whether functional strategies vary between native and invasive plants and if these differences have impact on processes at ecosystem level. Eight functional traits in wood and leaves of all woody species reported in our study area were measured. Over two contrasting climatic seasons and three vegetation covers, we measured four water regulation properties of soils. We found that forest covers showed higher values of hydraulic conductivity, water infiltration rate, volumetric water content and lower penetration resistance (lower compaction) of soils for both climatic seasons than other vegetation covers. In contrast, zones dominated by invasive species and degraded covers showed greater similarity between hydraulic properties in the soil and high variation among climatic seasons. Additionally, evergreen and deciduous species were functionally different, and invasive evergreen legumes were characterized by acquisitive hydraulic traits but leaf, height and wood density related with conservative strategies. The dominance of functional traits, mainly hydraulic traits, was correlated with volumetric moisture content of the soil. The functional differences between invasive and native species explained the lower soil moisture and greater soil compaction values in invasive covers compared to the forest covers. These results confirm that introduction of invasive species have an impact on soil ecosystem properties on tropical dry forests. Additionally, it is possible that invasive species can help to recover some hydraulic properties and can facilities the restoration processes in degraded areas where the native species failed to colonize. [ABSTRACT FROM AUTHOR]