Intransitivity increased the functional diversity of drylands, particularly under high rainfall seasonality, by limiting functionally dominant species. Our findings specify how intransitivity structures the functional diversity of dryland vegetation worldwide. Intransitivity may be particularly important in ecosystems where the availability of abiotic resources changes over time, thereby breaking down inherent competitive hierarchies between plant species. Neglecting intransitivity will bias our estimation of the impacts of biotic interactions on plant communities, a fundamental issue to fully understand how plant communities will respond to ongoing environmental changes.