Tropical montane cloud forests (TMCFs) are globally important ecosystems, acting as large carbon sinks and supporting exceptional biodiversity. However, climate-driven declines in rainfall threaten these forests, but their responses to long-term soil moisture deficit remain poorly understood. We implemented a 5-year throughfall exclusion (TFE) experiment in a Peruvian TMCF, reducing soil moisture by 69.1% across a 0.09 ha plot. We compared the full carbon cycle budget, and surveyed tree physiological traits linked to hydraulics, metabolism and nutrients in the TFE plot and an adjacent, unmodified control (CON) plot. Soil drought reduced gross primary productivity by 4.24 ± 1.97 Mg C ha⁻¹ year⁻¹ but did not change net primary productivity because of an equivalent 3.38 ± 1.42 Mg C ha⁻¹ year⁻¹ decline in autotrophic respiration. Net ecosystem exchange also remained unchanged over 5 years of soil drought. Trees did not change xylem conductivity, hydraulic safety margins or photosynthetic capacity in the TFE, but did have 0.027 ± 0.011 g cm⁻³ denser wood and 4.58% ± 1.03% higher trunk starch concentrations. These results suggest that trees in TMCF avoid hydraulic failure and carbon starvation under sustained soil moisture drought via metabolic downregulation, resource conservation and non-structural carbohydrate storage. However, reduced uptake of nutrients (nitrogen, phosphorus, calcium) and 90.6% ± 29.8% decline in fruit production may impact future growth and demography. Our findings demonstrate surprising resilience of TMCFs to sustained, severe soil drought but highlight potential impacts on nutrient cycling and reproduction under climate change. Understanding the impacts of soil drought in conjunction with other climatic changes (e.g., fog reduction, temperature increases) is needed to fully assess the resilience of TMCFs to climate change.