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Determinants of the balance between grass and woody vegetation in grasslands and savannas have received considerable attention because of the potential for dramatic shifts in ecosystem structure and function as one growth form replaces the other. We studied a mesic grassland where recently established "shrub islands" are increasing in abundance due to fire suppression. Our objective was to assess the role of the direct effects of fire vs. indirect alterations in resource availability (N and light), as mechanisms that may constrain/facilitate shrub (Cornus drummondii) encroachment. The direct effects of fire in 2001 and 2002 were 100% aboveground mortality of C. drummondii shoots and removal of the detrital layer. Post-fire resprouting resulted in ∼600% increase in stem density compared to a 200% increase in shrub islands protected from fire. In burned shrub islands with an added detrital layer, temperature and light penetration to the soil surface were reduced (by 6.5°C and to <3% of full sunlight), but stem density still increased by ∼400%. Thus, both the direct effects of fire and the indirect effect on the energy environment increased C. drummondii stem densities. In contrast, N additions did not influence new stem production or aboveground net primary productivity (ANPP; grams per square meter per year), suggesting that N availability did not constrain shrub growth during this study. While fire did not impact total ANPP, it did shift the relative abundance of growth forms. Grass productivity (360.7 ± 20.1 g/m² [mean ± 1 SE]) was stimulated (an increase of ∼30%) by the high light conditions of the post-fire environment, while C. drummondii ANPP (34.2 ± 2.4 g/m²) was reduced by ∼30%. In shrub islands protected from fire, C. drummondil ANPP was greatest (50.4 ± 2.2 g/m²), whereas lower graminoid ANPP (282.5 ± 19.9 g/m²) was observed. The persistence of woody vegetation, despite two successive fires, along with a significant reduction in grass ANPP (∼30%) suggests that once established, C. drurnmondii can persist and exclude C4 grasses. Thus, restoring fire to mesic grasslands may prevent further conversion to shrub/woodland, but the abundance of shrubs is likely to remain unchanged with community structure co-dominated by multiple growth forms. [ABSTRACT FROM AUTHOR]