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Fungi are prominent components of most terrestrial ecosystems, both in terms of biomass and ecosystem functioning, but the hyper-diverse nature of most communities has obscured the search for unifying principles governing community organization. In particular, unlike plants and animals, observational studies provide little evidence for the existence of niche processes in structuring fungal communities at broad spatial scales. This limits our capacity to predict how communities, and their functioning, vary across landscapes. We outline how a shift in focus, from taxonomy toward functional traits, might prove to be valuable in the search for general patterns in fungal ecology. We build on theoretical advances in plant and animal ecology to provide an empirical framework for a trait-based approach in fungal community ecology. Drawing upon specific characteristics of the fungal system, we highlight the significance of drought stress and combat in structuring free-living fungal communities. We propose a conceptual model to formalize how trade-offs between stress-tolerance and combative dominance are likely to organize communities across environmental gradients. Given that the survival of a fungus in a given environment is contingent on its ability to tolerate antagonistic competitors, measuring variation in combat trait expression along environmental gradients provides a means of elucidating realized, from fundamental niche spaces. We conclude that, using a trait-based understanding of how niche processes structure fungal communities across time and space, we can ultimately link communities with ecosystem functioning. Our trait-based framework highlights fundamental uncertainties that require testing in the fungal system, given their potential to uncover general mechanisms in fungal ecology.