Nutritional content of host plants is expected to drive caterpillar species assemblages and their trait composition. These relationships are altered by tree richness-induced neighborhood variation and a seasonal decline in leaf quality. We tested how key functional traits related to the growth and defenses of the average caterpillar hosted by a tree species are shaped by nutritional host quality. We measured morphological traits and estimated plant community-level diet breadth based on occurrences from 1020 caterpillars representing 146 species in a subtropical tree diversity experiment from spring to autumn in one year. We focused on interspecific caterpillar trait variation by analyzing presence-only patterns of caterpillar species for each tree species. Our results show that tree richness positively affected caterpillar species-sharing among tree species, which resulted in lowered trait variation and led to higher caterpillar richness for each tree species. However, community-level diet breadth depended more on the nutritional content of host trees. Higher nutritional quality also supported species-poorer but more abundant communities of smaller and less well-defended caterpillars. This study demonstrates that the leaf nutritional quality of trees shapes caterpillar trait composition across diverse species assemblages at fine spatial scales in a way that can be predicted by ecological theory.