We document spatial changes in species diversity, composition, community structure, and mortality of trees across a gradient of water availability in a tropical dry forest in western Mexico. This gradient occurs along the main stream of a small watershed of less than 1 km in length. Four 30 x 80 m plots were established systematically to include the driest (ridge top of the watershed) to the wettest sites (watershed bottom) within this watershed. All stems larger than 5 cm were identified, and measured for diameter and height. Dead stems larger than 5 cm were measured and classified as: a) found on live or dead trees, and b) standing ("snags") or lying (" downlogs") on the ground. The number of recorded species per plot declined from 73 to 44 species as water availability decreased. A decline in estimated total richness, and in Shannon-Wiener and Simpson diversity indices was also observed in the drier plots. Species composition strongly changed along the gradient, with the two ends of the gradient sharing only 11% of the species. Stem density and percentage of dead stems and trees increased in abundance and basal area from the wetter to the drier sites. Tree and stem size (basal area, height and stem diameter) showed the opposite trend. Nonetheless, total basal area of live trees was largest at the two end gradient locations and oscillated between 12.22 m2 ha-1 and 7.93 m2 ha -1. Proportion of snags increased towards the driest site (from 46 to 72%), while that of down logs decreased. Overall, our results suggest that small-scale gradients of water availability play a paramount role in the spatial organization of tree communities in seasonal tropical environments.