Habitat fragmentation and climate change are the two main threats to global biodiversity. Understanding their combined impact on plant community regeneration is vital for predicting future forest structure and conserving biodiversity. This study monitored the seed production, seedling recruitment and mortality of woody plants in the Thousand Island Lake, a highly fragmented anthropogenic archipelago, for 5 years. We analyzed the seed-seedling transition, seedling recruitment and mortality of different functional groups in the fragmented forests and conducted correlation analyses involving climatic factors, island area, and plant community abundance. Our results showed that: 1) shade-tolerant and evergreen species had higher seed-seedling transition, seedling recruitment and survival rate than shade-intolerant and deciduous species in time and space, and these advantages increased with the island area. 2) Seedlings in different functional groups responded differently to island area, temperature and precipitation. 3) Increasing active accumulated temperature (the sum of the mean daily temperature above 0 °C) significantly increased seedling recruitment and survival, and warming climate favored the regeneration of evergreen species. 4) The seedling mortality rate of all plant functional groups increased with the increase of island area, but the increasing strength weakened significantly with the increase of the annual maximum temperature. These results suggested that the dynamics of woody plant seedlings varied among functional groups, and can be regulated separately and jointly by fragmentation and climate.