Woody plant encroachment - the conversion of grasslands to tree- or shrub-dominated ecosystems - occurs in rangelands and savannas worldwide. In eastern Australia, coolibah ('Eucalyptus coolabah' subsp. 'coolabah' Blakely & Jacobs) regenerated densely following floods in the mid 1970s, converting derived grasslands to dense woodlands. We compared soil and groundstorey vegetation attributes of dense coolibah regeneration to adjacent derived grasslands at three grazed sites in the northern riverine plains of New South Wales. Groundstorey species richness and diversity were significantly higher and groundstorey biomass was significantly lower in dense regeneration plots than in derived grassland plots. Soils from dense regeneration had higher C : N and pH, and lower Na than soils from derived grasslands. Although groundstorey species composition differed significantly between derived grasslands and dense regeneration within sites, variation among sites was more pronounced, indicating that site factors influence community composition more than dense regeneration of coolibah. Our findings suggest that, in contrast to other studies of woody plant encroachment, dense regeneration of coolibah does not result in a decrease in plant biodiversity or soil condition.