Wildfires are increasing in frequency, intensity, and extent globally due to climate change and they can alter forest composition, structure, and function. The destruction and subsequent regrowth of young vegetation can modify the ecosystem evapotranspiration and downstream water availability. However, the response of forest recovery on hydrology is not well known with even the sign of evapotranspiration and water yield changes following forest fires being uncertain across the globe. Here, we quantify the effects of forest regrowth after catastrophic wildfires on evapotranspiration and runoff in the world's tallest angiosperm forest (Eucalyptus regnans) in Australia. We combine eddy covariance measurements including pre- and post-fire periods, mechanistic ecohydrological modeling and then extend the analysis spatially to multiple fires in eucalypt-dominated forests in south-eastern Australia by utilizing remote sensing. We find a fast recovery of evapotranspiration which reaches and exceeds pre-fire values within 2 years after the bushfire, a result confirmed by eddy covariance data, remote sensing, and modeling. Such a fast evapotranspiration recovery is likely generalizable to tall eucalypt forests in south-eastern Australia as shown by remote sensing. Once climate variability is discounted, ecohydrological modeling shows evapotranspiration rates from the recovering forest which reach peak values of +20% evapotranspiration 3 years post-fire. As a result, modeled runoff decreases substantially. Contrary to previous research, we find that the increase in modeled evapotranspiration is largely caused by the aerodynamic effects of a much shorter forest height leading to higher surface temperature, higher humidity gradients and therefore increased transpiration. However, increases in evapotranspiration as well as decreases in runoff caused by the young forest are constrained by energy and water limitations. Our result of an increase in evapotranspiration due to aerodynamic warming in a shorter forest after wildfires could occur in many parts of the world experiencing forest disturbances.