Tree seedlings in tropical rain forests are subject to both damage from natural enemies and intense interspecific competition. This leads to a trade-off in investment between defense and growth, and it is likely that tree species specialized to particular habitats tailor this balance to correspond with local resource availability. It has also been suggested that differential herbivore impacts among tree species may drive habitat segregation, favoring species adapted to particular resource conditions. In order to test these predictions, a reciprocal transplant experiment in Sabah, Malaysia, was established with seedlings of five species of Dipterocarpaceae. These were specialized to either alluvial (Hopea nervosa, Parashorea tomentella) or sandstone soils (Shorea multiflora, H. beccariana), or were locally absent (S. fallax). A total of 3000 seedlings were planted in paired gap and understory plots in five sites on alluvial and sandstone soils. Half of all seedlings were fertilized. Seedling growth and mortality were recorded in regular samples over 3.5 years, and rates of insect herbivore damage were estimated from censuses of foliar tissue loss on marked mature leaves and available young leaves. Greater herbivory rates on mature leaves had no measurable effects on seedling growth but were associated with a significantly increased likelihood of mortality during the following year. In contrast, new-leaf herbivory rates correlated with neither growth nor mortality. There were no indications of differential impacts of herbivory among the five species, nor between experimental treatments. Herbivory was not shown to influence segregation of species between soil types, although it may contribute toward differential survival among light habitats. Natural rates of damage were substantially lower than have been shown to influence tree seedling growth and mortality in previous manipulative studies.