A prominent theory explaining species coexistence in diverse tropical forests is based on species differences in requirements for potentially limiting resources.  Differences in belowground resources may be important in structuring plant communities.  While species distribution patterns have frequently been found to correlate with soil conditions, the mechanisms by which plant-soil associations arise remain unclear.  I surveyed understory palm communities and soil nutrient availability in ten, 1-hectare plots in the Fortuna Forest Reserve in western Panama.  A total of 24 understory palm species belonging to 5 genera were recorded.  Understory palm communities were non-randomly distributed among forests differing in soil nutrient availability.  Variation in palm community similarity was best correlated with pH, nitrogen mineralization and extractable phosphorus concentrations (in that order).  Nitrogen may be the most limiting resource in these forests given the low mineralization rates at the elevation of these sites.  A transplant experiment using a subset of the species from the palm surveys examining the combined effects of soil nutrient availability and herbivory on palm seedling performance, indicated that multiple mechanisms may be involved in determining the observed palm-soil associations.