Resolving trade-offs between economic development and biodiversity conservation needs is crucial in currently developing countries and in particularly sensitive systems harboring high biodiversity. Yet, such a task is challenging because human activities have complex effects on biodiversity. We assessed the effects of intense economic development on Hainan Island (southern China) on different components of biodiversity. This highly biodiverse tropical island has undergone extensive economic development and conversion of forest to agriculture and urban area. We identified 3 main transformation areas (low, medium, and high transformation) based on land-use, local-climate, and economic changes across 145 grids (10 × 10 km), and estimated changes in avian biodive6rsity from 1998 to 2013. We recorded ongoing taxonomic biotic homogenization throughout the island. Differences between traditional and directional alpha diversity decreased by 5%. Phylogenetically clustering increased by 0.5 points (W = 7928, p < 0.01), and functional overdispersion increased by 1 point (W = 16,411, p < 0.01). Initial taxonomic, phylogenetic, and functional scores correlated negatively with changes in these scores across all transformation areas (all ps < 0.01). At the local scale, economic and environmental indicators showed complex and divergent effects across transformation areas and biodiversity components. These effects were only partially ameliorated in an ecological function conservation area in the mountainous central part of the island. We found complex effects of economic development on different biodiversity dimensions in different areas with different land uses and protection regimes and between local and regional spatial scales. Profound ecosystem damage associated with economic development was partially averted, probably due to enhanced biodiversity conservation policies and law enforcement, but not without regional-scale biotic homogenization and local-scale biodiversity loss.