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Aims: Climate warming at high altitudes occurs at an above‐average rate. Due to short geographical distances, warm‐adapted species might establish rapidly in mountain communities, while cold‐adapted specialists are likely to locally disappear, sometimes after a lag phase. Here, we investigate changes not only of the community composition of species‐rich mountain meadows, but also resulting alterations of their functional identity and diversity. Thereby, we hypothesize that transplantation to a warmer lowland environment leads to a shift towards a more acquisitive resource‐use strategy, caused by the immigration of lowland species. Temporarily this leads to an increase in functional diversity through the lagged extinction of high‐altitude species with conservative resource‐use strategies. Location: European Alps, Germany. Methods: Using a space‐for‐time substitution, we conducted a community transplant experiment at a high‐ and low‐elevation common garden site, where we compared the development of highland communities transplanted to the warmer low‐elevation site and control plant communities locally replanted at both sites over a period of 4 years after transplantation. In situ, we collected functional leaf morphological and biochemical traits based on which we calculated community weighted mean traits as well as community functional richness and functional divergence. Results: Species richness of the communities transplanted to the low‐elevation site increased over time, resulting from more species invasions than disappearances. This led to increasing similarity between transplanted highland communities and local lowland communities, and to greater functional richness and divergence 4 years after transplantation, although mean community traits did not diverge yet. Conclusions: Although the exposure to warmer temperatures did not immediately lead to the extinction of typical mountain meadow species, substantial community changes are expected through immigration of warm‐adapted species. Resulting changes in the functional characteristics of mountain communities are likely to modify competition regimes within these communities, which might accelerate the local extinction of mountain specialists. [ABSTRACT FROM AUTHOR]