Climate warming and drought may alter tree establishment in savannas through differential responses of tree seedlings and grass to intermittent rainfall events. We investigated leaf gas exchange responses of dominant post oak savanna tree (Quercus stellata and Juniperus virginiana) and grass (Schizachyrium scoparium, C4 grass) species to summer rainfall events under an ambient and intensified summer drought scenario in factorial combination with warming (ambient, +1.5 °C) in both monoculture and tree-grass mixtures. The three species differed in drought resistance and response of leaf gas exchange to rainfall events throughout the summer. S. scoparium experienced the greatest decrease in Aarea (−56% and −66% under normal and intensified drought, respectively) over the summer, followed by Q. stellata (−44%, −64%), while J. virginiana showed increased Aarea under normal drought (+13%) and a small decrease in Aarea when exposed to intensified summer drought (−10%). Following individual rainfall events, mean increases in Aarea were 90% for S. scoparium, 26% for J. virginiana and 22% for Q. stellata. The responsiveness of Aarea of S. scoparium to rainfall events initially increased with the onset of drought, but decreased dramatically as summer drought progressed. For Q. stellata, Aarea recovery decreased as drought progressed and with warming. In contrast, J. virginiana showed minimal fluctuations in Aarea following rainfall events, in spite of declining water potential, and warming enhanced recovery. J. virginiana will likely gain an advantage over Q. stellata during establishment under future climatic scenarios. Additionally, the competitive advantage of C4 grasses may be reduced relative to trees, because grasses will likely exist below a critical water stress threshold more often in a warmer, drier climate. Recognition of unique species responses to critical global change drivers in the presence of competition will improve predictions of grass–tree interactions and tree establishment in savannas in response to climate change.