1. Differences in the competitive ability of plant functional groups at early life-history stages can have important consequences for community structure. In particular, trade-offs in allocation to roots by woody plant seedlings may influence competitive ability with grasses in fire-prone vegetation. 2. We followed post-fire survival of seedlings of facultative resprouter and obligate seeder (firekilled) shrubs for 3 years in adjacent communities with a grassy/graminoid ground stratum (54 plots, 20 m²) or a non-graminoid ground stratum(54 plots, 20 m²). 3. The competitive effect of a grass (Poa) on seedlings of three congeneric pairs of resprouters and obligate seeder shrubs was tested in a factorial experiment where nutrients and the grass competitor were manipulated. The effects of grass (+,-) and nutrients (+,-) on the growth response, biomass allocation and root carbohydrate storage were measured after harvest at 26 weeks and the relative neighbour effect calculated. 4. Post-fire shrub seedling survival was high with about 50% (2163 seedlings) surviving over 3 years, but this varied between habitats and functional groups. In the grassy/graminoid ground layer communities 27% of shrub seedlings survived, whereas in the habitats with a more open ground stratum 55% of seedlings survived. In grassy habitats, obligate seeder survival was lower (23% survival) than that of resprouter seedlings (35% survival). Similarly, in open habitats, obligate seeder seedling survival was lower (51%) than that of resprouter seedlings (64% survival). 5. Growth of both resprouters and obligate seeders in our manipulative experiment was strongly reduced in the presence of a grass competitor. Moreover, the addition of nutrients increased the relative difference in mass and height between those seedlings exposed to a grass competitor and those grown without a competitor. Resprouter species allocated more to roots under competition and were less affected by grass competition than obligate seeders. 6. Synthesis. The results of seedling survival and of the experiment on the effects of grass competition on woody plant seedlings suggest that early life-history trade-offs in allocation influence seedling survival. Allocation to resprouting appears to enhance the ability of shrub seedlings to survive grass competition. We propose that grass competition across productivity gradients plays an important role in influencing landscape-level distribution patterns of woody resprouters.