The effects of defoliation and drought on grass production and on growth and survival of the invasive woody plant species Acacia karroo Hayne were investigated in a greenhouse experiment in grass-Acacia seedling mixtures. We tested the hypothesis that heavy and repeated clipping of grasses reduces both their above- and below-ground biomass and results in diminished soil water use. This would enhance A. karroo seedling performance. In one experiment, seedlings of A. karroo were planted in pots with established tussocks of Setaria incrassata and were either adequately watered or subjected to periodic droughts. The grass was clipped to different heights (clipped to 5cm, clipped to 11 cm and no clipping). Heavy grass defoliation resulted in reduced biomass production in both moisture environments. Acacia karroo plants showed low biomass production, low relative growth rate, and higher root weight ratios at low soil moisture availability. Unclipped grass significantly reduced A. karroo biomass production, even under wet conditions, where standing crop reached 1026 g.m-2. In another experiment, A. karroo seedlings growing with established grasses clipped to different heights were subjected to 35 days of drought during which soil moisture change and seedling survival were monitored. Pots with heavily clipped grasses always had higher moisture than unclipped or lightly clipped treatments. There was a positive correlation between A. karroo seedling survival and soil moisture content. Heavy grass defoliation enhances tree seedling survival as it reduces grass biomass production and thus increases soil moisture availability. We conclude that intense grass defoliation is an important factor determining competition between tree seedlings and grasses in semi-arid savannas. Keywords: Acacia karroo, bush encroachment, grass defoliation, seedling survival.