ABSTRACT Closely related species coexisting in the same habitat often undergo niche differentiation or morphological adaptations to reduce interspecific competition and secure sufficient resources, particularly when their ecological niches overlap. Such differentiation may manifest as niche expansion or enhanced morphological adaptations to improve competitive advantages in resource utilization. This study focused on Upeneus sulphureus and Upeneus tragula in the Beibu Gulf, using functional trait analysis, stable isotope techniques, and morphological comparisons to explore their functional niche differentiation and resource utilization strategies. Functional richness analysis showed that U. tragula had significantly higher functional richness (22.33%, n = 38) than U. sulphureus (11.64%, n = 67), with low functional niche overlap (27.91%), indicating significant divergence in resource utilization. Trophic niche analysis further revealed that U. tragula had significantly higher trophic diversity (CD) and core niche breadth (SEAc) than U. sulphureus , indicating broader resource utilization capabilities and adaptability. The results revealed significant differences in functional traits between U. sulphureus and U. tragula : U. sulphureus has a robust body, longer pectoral fins and snout, and a larger oral gape, exhibiting lower δ 13 C (−18.38‰ ± 0.35‰) and δ 15 N (13.31‰ ± 0.47‰) values ( p < 0.05), primarily feeding on cephalopods. In contrast, U. tragula has a streamlined body, larger eye diameter, and longer barbels, displaying higher δ 13 C (−15.23‰ ± 0.96‰) and δ 15 N (15.36‰ ± 0.38‰) values ( p < 0.01), primarily preying on small benthic invertebrates. These morphological differences are closely related to the feeding strategies and habitat preferences of the two goatfish species, reflecting their ecological adaptive divergence. This study reveals that U. sulphureus and U. tragula achieve coexistence through functional trait and trophic niche differentiation, providing important insights into species adaptive evolution and resource allocation mechanisms in ecosystems.