Abstract Climate and litter quality drive litter decomposition, but there is currently little consensus on their relative importance, likely because studies differ in the duration, the climatic gradients, and variability in litter-trait values. Understanding these drivers is important because they determine the direct and indirect (via vegetation composition) effects of climate change on decomposition and thereby on carbon and nutrient cycling. We studied how microclimate (soil moisture and temperature) and litter traits interactively affect litter mass loss, by using a reciprocal litter translocation experiment along a large climatic gradient in Chile. We followed decomposition for two years and used 30 plant species with a wide spectrum of functional-trait values. Litter traits had a strong impact on litter decomposition across the gradient, while an increase in decomposition with soil moisture was observed only in the wettest climates. Overall, soil moisture increased considerably in importance, relative to trait effects, at later decomposition stages, from ca. 15% of the importance of traits after 3 and 6 months to ca. 110% after 24 months. Moreover, analyzing subsets of the 30 species showed that trait effects on litter decomposition gained in importance when including a greater variation in trait values. Synthesis. The relative effects of litter traits and climate on decomposition depend on the ranges in climate and litter traits considered and change with time. Our study emphasizes the critical role of representative ranges in climate and functional trait values for understanding the drivers of litter decomposition and for improving predictions of climate-change effects on this important ecosystem process.