Benthic macrofauna in the North Sea is subjected to a wide variety of anthropogenic stressors, which have a significant impact on community composition. In order to understand how these communities react to anthropogenic influences, the effect of natural environmental variation, such as temperature, salinity, or sediment characteristics, must first be understood to disentangle these from potential human pressures. This study determined changes in species and functional diversity of benthic macrofaunal communities along natural sediment gradients on small spatial scales (i.e. ~5 km). Soft-bottom assemblages including infauna and epifauna in the Sylt outer reef area of the North Sea were examined, with functional diversity being based on functional traits. Significant differences in infaunal species and functional composition were observed. Traits changing most significantly from coarse to fine sediment include longevity, age at maturity, movement type, length, and feeding mode. Significant increases in species and functional diversity were found (Simpson increasing from 0.40 to 0.83, Rao increasing from 0.10 to 0.20 from coarse to fine sand. Changes in community metrics were linked most strongly to the median grain size (MDGS) and organic content of sediments. No significant changes were found in species nor functional composition and diversity for epifaunal communities. Positive linear relationships were revealed between species and functional diversity in both infaunal (R2 = 0.95) and epifaunal (R2 = 0.99) communities. The results deliver valuable insight on the potential effects of community changes on ecosystem functioning and process-driven changes in assemblages. Further, the outcomes provide an important framework for ecological monitoring and impact assessments for future North Sea projects.