In order for diverse species to coexist in ecological communities, they must vary in ways that reduce competition. Often, this is done by some form of spatial niche separation where small differences in environment allow for coexistence among species. However, temporal separation of resources could also be a factor in driving community diversity. Here, we ask whether inter-annual variation in growing season precipitation could provide sufficient variation in water availability to allow plant species with different intrinsic metabolism to co-occur. We hypothesized that species would differentially respond to soil water availability, and that species with a metabolic strategy to conserve water at the expense of carbon gain would grow better in dry conditions relative to species with a metabolic strategy to gain carbon at the expense of foliar water loss. We measured above-ground biomass and leaf-level metabolism using carbon and oxygen stable isotope ratios for seven Asteraceae species across five experimental water treatments. Species differentially responded to variation in growing season water availability and, importantly, how they responded could be explained by differences in metabolism. Water-conservative species grew best in the dry treatments and had lower growth in wet treatments. Carbon-acquisitive species displayed the opposite pattern, with maximal growth in wet treatments and steep declines in dry treatments. Metabolic differences among co-occurring species may help explain temporal variation in growth, and could provide an underlying physiological mechanism for long-term dynamics that promote biodiversity.