Seedling growth under three shade levels was studied at Varanasi, India, for five tree species of tropical dry forest, which differed in life-history traits. Three of these were small-seeded pioneer (Albizia procera, Acacia nilotica and Phyllanthus emblica) and the other two were large-seeded non-pioneer (Terminalia arjuna and Terminalia chebula) species. Seedlings of all the species were subjected to three light levels (80–100%, 20–30% and 3–7% of full sunlight) comparable to sunlit gaps and shaded microsites in the dry forest. After 4 mo of shade treatment, height, basal area, biomass and other growth traits, viz. RGR (relative growth rate), NAR (net assimilation rate), and SLA (specific leaf area) were determined. Etiolation and plasticity indices were calculated. Reduction in seedling height, biomass and relative growth rates and enhancement in SLA due to shade was greater for small-seeded pioneer species. Seedlings from large-seeded non-pioneer species exhibited a stronger etiolation response to shade than seedlings from small-seeded species. Phenotypic plasticity indices for basal area, plant biomass and relative growth rate were greater for the three small-seeded early successional species (A. procera, A. nilotica and P. emblica), indicating their specialization in a more favourable light environment such as large gaps and forest peripheries. The non-pioneer and pioneer species differed only in the degree of shade tolerance, and we suggest that dry forest species cannot be strictly categorized into two distinct groups (shade tolerant vs. intolerant), rather shade preference and gap preference would be the more expressive terms. Marked environmental heterogeneity in terms of irradiance and the phenology of dry tropical trees permits coexistence of species of varying ecological traits, contributing to the maintenance of diversity in the dry forest.