The practice of removing woody vegetation to enhance water supply in semiarid rangelands in the United States continues to generate considerable interest, even though past research has yielded apparently contradictory results concerning its efficacy. In an attempt to elucidate the factors that determine whether and how woody vegetation removal affects water supply, we analysed the problem using a water balance approach. In our analysis, deep drainage is the water balance component associated with water supply. Because the herbaceous vegetation that replaces the woody plants generally has a shallower effective rooting depth (Rd), the amount of soil water potentially available for transpiration is reduced and more is available for deep drainage. The potential increase in deep drainage can be estimated from the capacity of the soil to store plant-available water (Sc) and may be substantial. Our case study on sagebrush rangeland documents how Rd, and consequently Sc, changed after woody vegetation at the site was removed by burning. Using depth profiles of soil water content and matric potential, we showed that the Rd of the post-fire vegetation was about 140 cm, 60 cm less than that of the pre-fire vegetation, and that this resulted in a potential increase in deep drainage of about 6 cm of water—which in semiarid rangelands is substantial. Historical precipitation patterns indicate that there is nearly always sufficient net precipitation to generate the additional 6 cm of deep drainage at this site. However, in most of the area the soil depth is less than 140 cm, so that transpiration and deep drainage would be unaffected by the vegetation change and the overall water supply enhancement would be much less than 6 cm. These results indicate that the change in Sc that may follow woody shrub removal is an important criterion to evaluate sites for vegetation conversion. Copyright © 2006 John Wiley & Sons, Ltd.