Increased levels of atmospheric CO2 may alter the structure and composition of plant communities by affecting how species respond to their physical and biological environment. We investigated how elevated CO2 influenced the response of paper birch ( Betula papyrifera Marsh.) and yellow birch (Betula alleghaniensis Britt.) seedlings to variation in soil moisture. Seedlings were grown for four months on a soil moisture gradient, individually and in mixed species stands, in controlled environment facilities at ambient (375 μL L–1) and elevated (700 μL L–1) atmospheric CO2. For both individually and competitively grown paper birch seedlings, there was a greater CO2 growth enhancement for seedlings watered less frequently than for well-watered seedlings. This differential change in CO2 responsiveness across the moisture gradient reduced the difference in seedling growth between high and low water levels and effectively broadened the regeneration niche of paper birch. In contrast, for yellow birch seedlings, elevated CO2 only produced a significant growth enhancement at the wet end of the soil moisture gradient, and increased the size difference between seedlings at the two ends of the gradient. Gas exchange measurements showed that paper birch seedlings were more sensitive than yellow birch seedlings to declines in soil moisture, and that elevated CO2 reduced this sensitivity. Additionally, elevated CO2 improved survival of yellow birch seedlings growing in competition with paper birch in dry stands. Thus, elevated CO2 may influence regeneration patterns of paper birch and yellow birch on sites of differing soil moisture. In the future, as atmospheric CO2 levels rise, growth of paper birch seedlings and survival of yellow birch seedlings may be enhanced on xeric sites, while yellow birch may show improved growth on mesic sites.