The understory of California's coast redwood forests boasts an abundance of ferns, half of which are drought deciduous. Despite their ecological importance, little is known about the functional differences between deciduous and perennial ferns. This study explored morphological and physiological leaf traits of an assortment of coast redwood forest fern species sampled from the southern, drier extent of the ecosystem, to determine if deciduous species are less drought tolerant than co-occurring evergreen species because of their shorter leaf lifespan. In mid-summer, all ferns were well hydrated with water potentials above −1 MPa. Although the deciduous ferns were more vulnerable to hydraulic dysfunction by embolism, it is likely that all species experienced similarly low degrees of embolism in situ, as inferred from mid-day water potential measurements. Despite their similar water relations when water was not limiting, we observed that deciduous ferns had thinner pinnae because they avoid the late summertime drought by shedding their fronds, in contrast to co-occurring evergreen ferns that invest in sclerophyllous leaves that persist for at least two growing seasons. Our study shows that even within the mesic habitat of the forest understory, ferns can exploit a spectrum of functional strategies that allows them to thrive in separate niches, differences that may become more pronounced in water-limiting habitats.