The effects of understory dwarf bamboo (Sasa kurilensis) on soil water and the growth of overstory trees were studied in a dense secondary forest of Betula ermanii in northern Japan. Four plots were established in a Betula ermanii forest with Sasa kurilensis in the understory. The Sasa was removed in two of the plots. The annual increment of the trunk diameter for each tree was measured in the first two years from the commencement of the experiment. Soil water potential was similar in the plots following significant rainfall, but was found to be greater in the plot without Sasa between rainfall events. This suggests that the removal of Sasa slows the reduction of soil water after rainfall. The relative growth rate of the trunk diameter of Betula ermanii increased with tree size in all of the plots because taller trees strongly suppressed smaller ones in the dense forest. The growth rates of Betula ermanii were higher in the plots without Sasa. However, the difference in growth rates between all of the plots tended to be smaller in smaller size classes, possibly because smaller trees were strongly suppressed by larger ones, irrespective of the presence/absence of Sasa. Therefore, the removal of Sasa increased soil water and encouraged the growth of larger Betula ermanii in dense forest during the first two years after the Sasa was removed. The present study suggests that Sasa can reduce the growth of larger Betula ermanii in dense forest by limiting available soil water to these trees.