Shoot growth, leaf growth and net rate of leaf photosynthesis were measured on Eucalyptus marginata Donn ex Smith (jarrah) seedlings in mediterranean-climate forest of south-west Western Australia to determine the effects of overstorey, type of site and application of fertiliser. Soil temperature, soil water deficit, leaf water potential, rainfall and photosynthetically active radiation (PAR) were monitored. Seedlings on sites on which the overstorey had been removed experienced significantly higher soil temperatures for 9 months of the year (of up to 6°C), smaller soil and leaf water deficits during the dry season (minimum predawn leaf water potentials of -0.5 MPa compared with -1.6 MPa), and greater PAR (maximum values of 1900 μmol m-2 s-1 compared with 900 μmol m-2 s-1) than seedlings on sites with an overstorey. Shoot dry weight was eight times greater, leaf area was more than 20 times greater and photosynthesis was two to 10 times greater on sites with the overstorey removed. Application of fertiliser increased shoot dry weight by a factor of two. For sites with the overstorey removed, seedlings on a high quality site achieved six times the shoot dry weight of those on a bauxite pit and three times the shoot dry weight of those on a low quality site. Leaf growth commenced in October when soil temperature at 40 cm reached about 17°C. Leaf growth decreased during January when water deficits were severe, increased again in March and April after rainfall, but decreased in May when soil temperature fell below 15°C. Leaf growth and photosynthesis both decreased over the dry season as water deficits developed. Seedlings on the site with the overstorey removed had higher rates of photosynthesis and greater photosynthetic capacity than those on the site with the overstorey retained. We conclude that the major effect of overstorey removal was to reduce some of the limitations that water deficits impose on growth. Secondary effects of overstorey removal also favouring seedling growth were increases in soil temperature and PAR.