Belowground processes, such as fine root demography and soil water redistribution, can alter carbon, nutrient and water cycles in terrestrial ecosystems. Although these processes are known to differ significantly across broad spatial scales and plant functional types, little is known about the differences among species in narrow geographical scales. Studies were conducted in a group of five tree species that grow in the sandhills of the fall-line region of southeastern United States. Four Quercus species (Q. laevis, Q. incana, Q. margaretta and Q. marilandica) and the longleaf pine (Pinus palustris) co-occur in areas of intermediate fertility, but have different distribution along soil resource gradients. Species differences in fine root demography and hydraulic lift were studied by growing roots of adult trees in field rhizotrons and recording fine root production, death and lifespan and the water potential of the soil near the roots. The effect of variation in resource availability (water and nutrients) on fine root demography was also studied in greenhouse studies using seedlings. The species able to colonize xeric habitats (Q. laevis and Q. incana) exhibited fine roots with greater longevity but lower rates of production, death and percent mortality than species dominant in mesic habitats (Q. margaretta and Q. marilandica). The generalist species (P. palustris) exhibited intermediate fine root demography. Fine root death increased under high resources and under localized drought, especially in mesic species. Fine root production in mesic species was greater at high resource availability and after re-enrichment of dry surface soil. Only xeric Quercus species and the generalist P. palustris exhibited hydraulic lift ability. Consistent with optimality theory, these results suggest that greater fine root lifespan and hydraulic lift ability in xeric and generalist species may favor root persistence in dry soils, potentially reducing rates of resource loss. In contrast, greater fine root growth in mesic and generalist species may favor competition for resources. Results also indicate that species differences can be substantial even across congeners and narrow spatial scales. Hence, species-specific belowground processes deserve further investigation in order to understand how carbon and nutrient cycling respond to environmental change and shifts in species composition.