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Changes in species composition in two 4-ha plots of lowland dipterocarp rainforest at Danum, Sabah, were measured over ten years (1986-1996) for trees > or = 10 cm girth at breast height (gbh). Each included a lower-slope to ridge gradient. The period lay between two drought events of moderate intensity but the forest showed no large lasting responses, suggesting that its species were well adapted to this regime. Mortality and recruitment rates were not unusual in global or regional comparisons. The forest continued to aggrade from its relatively (for Sabah) low basal area in 1986 and, together with the very open upper canopy structure and an abundance of lianas, this suggests a forest in a late stage of recovery from a major disturbance, yet one continually affected by smaller recent setbacks. Mortality and recruitment rates were not related to population size in 1986, but across subplots recruitment was positively correlated with the density and basal area of small trees (10-< 50cm gbh) forming the dense understorey. Neither rate was related to topography. While species with larger mean gbh had greater relative growth rates (rgr) than smaller ones, subplot mean recruitment rates were correlated with rgr among small trees. Separating understorey species (typically the Euphorbiaceae) from the overstorey (Dipterocarpaceae) showed marked differences in change in mortality with increasing gbh: in the former it increased, in the latter it decreased. Forest processes are centred on this understorey quasi-stratum. The two replicate plots showed a high correspondence in the mortality, recruitment, population changes and growth rates of small trees for the 49 most abundant species in common to both. Overstorey species had higher rgrs than understorey ones, but both showed considerable ranges in mortality and recruitment rates. The supposed trade-off in traits, viz slower rgr, shade tolerance and lower population turnover in the understorey group versus faster potential growth rate, high light responsiveness and high turnover in the overstorey group, was only partly met, as some understorey species were also very dynamic. The forest at Danum, under such a disturbance-recovery regime, can be viewed as having a dynamic equilibrium in functional and structural terms. A second trade-off in shade-tolerance versus drought-tolerance is suggested for among the understorey species. A two-storey (or vertical component) model is proposed where the understorcy-overstorey species' ratio of small stems (currently 2:1) is maintained by a major feedback process. The understorey appears to be an important part of this forest, giving resilience against drought and protecting the overstorey saplings in the long term. This view could be valuable for understanding forest responses to climate change where drought frequency in Borneo is predicted to intensify in the coming decades.