Habitat loss and fragmentation result in significant landscape changes that ultimately affect plant diversity and add uncertainty to how natural areas will respond to future global change. This uncertainty is important given that the loss of biodiversity often includes losing key ecosystem functions. Few studies have explored the effects of landscape changes on plant functional diversity and evidence so far has shown far more pervasive effects than previously reported by species richness and composition studies. Here we present a review on the impact of habitat loss and fragmentation on (1) individual functional traits—related to persistence, dispersal and establishment—and (2) functional diversity. We also discuss current knowledge gaps and propose ways forward. From the literature review we found that studies have largely focused on dispersal traits, strongly impacted by habitat loss and fragmentation, while traits related to persistence were the least studied. Furthermore, most studies did not distinguish habitat loss from spatial fragmentation and were conducted at the plot or fragment-level, which taken together limits the ability to generalize the scale-dependency of landscape changes on plant functional diversity. For future work, we recommend (1) clearly distinguishing the effects of habitat loss from those of fragmentation, and (2) recognizing the scale-dependency of predicted responses when functional diversity varies in time and space. We conclude that a clear understanding of the effects of habitat loss and fragmentation on functional diversity will improve predictions of the resiliency and resistance of plant communities to varying scales of disturbance.