Declining rainfall is projected to have negative impacts on the demographic performance of plant species. Little is known about the adaptive capacity of species to respond to drying climates, and whether adaptation can keep pace with climate change. In fire-prone ecosystems, episodic recruitment of perennial plant species in the first year post-fire imposes a specific selection environment, offering a unique opportunity to quantify the scope for adaptive response to climate change. We examined the growth of seedlings of four fire-killed species under control and drought conditions for seeds from populations established in years following fire receiving average-to-above-average winter rainfall, or well-below-average winter rainfall. We show that offspring of plants that had established under drought had more efficient water uptake, and/or stored more water per unit biomass, or developed denser leaves, and all maintained higher survival in simulated drought than did offspring of plants established in average annual rainfall years. Adaptive phenotypic responses were not consistent across all traits and species, while plants that had established under severe drought or established in years with average-to-above-average rainfall had an overall different physiological response when growing either with or without water constraints. Seedlings descended from plants established under severe drought also had elevated gene expression in key pathways relating to stress response. Our results demonstrate the capacity for rapid adaptation to climate change through phenotypic variation and regulation of gene expression. However, effective and rapid adaptation to climate change may vary among species depending on their capacity to maintain robust populations under multiple stresses.