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Abstract: Woody plant encroachment in grasslands is a worldwide phenomenon. Despite many studies, the consequences of woody plant encroachment on sub-canopy vegetation and soil properties are still unclear. To better understand the impacts of trees on grassland properties we examined the following questions using a mountainous sub-tropical grassland of South Africa encroached by an indigenous tree, Acacia sieberiana as a case study: (1) Do trees increase sub-canopy herbaceous diversity, quality and biomass and soil nitrogen content? (2) Do large trees have a stronger effect than medium-sized trees on grass and soil properties? (3) Does the impact of trees change with the presence of livestock and position of trees in a catena? We studied grass and non-graminoid species diversity and biomass, grass quality and soil properties during the wet season of 2009. Nitrogen in grass leaves, soil cation exchange capacity and calcium and magnesium ion concentrations in the soil increased under tall Acacia versus open areas. Medium-sized Acacia decreased the gross energy content, digestibility and neutral detergent fibre of grasses but increased the species richness of non-graminoids. Tall and medium Acacia trees were associated with the presence of Senecio inaequidens, an indigenous species that is toxic to horses and cattle. The presence of livestock resulted in a decrease in herbaceous root biomass and an increase in soil carbon and leaf biomass of grass under Acacia. Tree position in the catena did not modify the impact of trees on the herbaceous layer and soil properties. For management of livestock we recommend retaining tall Acacia trees and partially removing medium-sized Acacia trees because the latter had negative effects on grass quality. [Copyright &y& Elsevier]