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Montane and subalpine grasslands are prominent, but poorly understood, features of the Rocky Mountains. These communities frequently occur below reversed tree lines on valley floors, where nightly cold air accumulation is spatially coupled with fine soil texture. We used field experiments to assess the roles of minimum temperature, soil texture, grass competition, and ungulate browsing on the growth, photosynthetic performance, and survival of transplanted ponderosa pine (Pinus ponderosa) seedlings at 32 sites straddling such reversed tree lines in the Valles Caldera National Preserve (VCNP) of the Jemez Mountains, New Mexico (USA). Seedling growth increased most strongly with increasing nighttime minimum temperatures away from the valley bottoms; seedlings experiencing the coldest temperatures on the caldera floor exhibited stunted needles and often no measurable height growth. Based on the chlorophyll fluorescence ratios PhiPSII and Fv/Fm, we found that low minimum temperatures, low soil moisture, and fine soil texture all contributed to photoinhibition. Neighboring herbs had only minor negative effects on seedlings. We found no effect of ungulates, but golden-mantled ground squirrels (Spermophilus lateralis) caused substantial seedling mortality. Second-year seedling survival was highest on sandy soils, and third-year survival was highest at sites with higher minimum temperatures. We conclude that differential tree seedling establishment driven by low minimum temperatures in the valley bottoms is the primary factor maintaining montane grasslands of the VCNP, although this process probably operated historically in combination with frequent surface fire to set the position of the tree line ecotone. As at alpine tree lines, reversed tree lines bordering montane and subalpine grasslands can represent temperature-sensitive boundaries of the tree life form.