Ecological theory provides two contrasting predictions about the characteristics of the species combining to form communities. Classical competition theory states that they will be less similar than expected by chance, whilst the environmental structuring hypothesis states that they will be more similar. We investigated these predictions by applying phylogenetic methods of analysis (PICs) to a grassland community, examining species on the basis of their traits. At the scale of investigation most useful in making predictions about the presence and abundance of species (the community level), the species forming the community were more similar than would be expected by chance. The use of PICs resulted in a more sensitive test than if phylogeny had been ignored, allowing the detection of effects that would otherwise have been overlooked or underestimated. Selected traits from the PICs analysis were used to develop a predictive model of community membership using discriminant analysis. This correctly identified species in the pool which were present in the community but failed to predict absences accurately, implying that dispersal limitation may operate in the community.