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Context: Tagasaste (Cytisus proliferus), a fast-growing leguminous tree, has potential to supplement pasture production in steep-hill country and to increase pasture resilience. Aims: In the companion paper, we quantified tagasaste production characteristics. Here, we determine the effect of proximity of 10-year-old tagasaste trees on productivity of eight pasture species including grasses (perennial ryegrass, Lolium perenne ; cocksfoot, Dactylis glomerata ; prairie grass, Bromus willdenowii ; microlaena, Microlaena stipoides), perennial legumes (white clover, Trifolium repens ; red clover, T. pratense ; lotus, Lotus pedunculatus), and an annual legume (subterranean clover, T. subterraneum). Methods: A site was established in the East Coast region of the North Island of New Zealand on steep-hill country (>20° slope). Herbage production, nutritive value and survival of pasture species established as spaced transplants were measured over 3 years. Results: Cocksfoot had high survival, herbage production and metabolisable energy content but was negatively affected by proximity to tagasaste. Microlaena was not significantly affected by proximity to tagasaste; however, it was much less productive and had lower nutritive values than the other grasses. Only 40% of perennial ryegrass transplants survived 3 years, and survival of perennial legumes was negligible. Subterranean clover was able to set seed in the open and in shade. Conclusions: Cocksfoot was the most productive grass species, and microlaena was least affected by proximity to tagasaste. Given the poor persistence of perennial clovers, annual clovers may be better suited to a tagasaste silvopasture on steep, dry hillsides. Implications: Mixtures of cocksfoot and subterranean clover may be well suited to summer-dry hillsides, between and under trees in a tagasaste silvopasture. Microlaena may provide some forage and can maintain groundcover despite shade. Growth and survival of eight pasture species in proximity to the forage shrub tagasaste were quantified in drought-prone hill country. Cocksfoot and subterranean clover were highly productive only in lightly shaded areas, whereas microlaena, although less productive than other grasses, was not significantly affected by shade treatment, and perennial legumes showed negligible survival. Cocksfoot and subterranean clover could be established between trees in a tagasaste silvopasture, with naturalised microlaena maintained beneath the canopy to provide groundcover. [ABSTRACT FROM AUTHOR]