Forest encroachment threatens the biological diversity of grasslands globally. Positive feedbacks can reinforce the process, affecting soils and ground vegetation, ultimately leading to replacement of grassland by forest species. We tested whether restoration treatments (tree removal, with or without fire) reversed effects of nearly two centuries of encroachment by Abies grandis and Pinus contorta into dry, montane meadows in the Cascade Range, Oregon, USA. In nine, 1-ha plots containing a patchy mosaic of meadow openings and forests of varying age (20 to >140 yr), we compared three treatments affecting the ground vegetation: control (no trees removed), unburned (trees removed, slash burned in piles leaving 90% of the area unburned), and burned (trees removed, slash broadcast burned). We quantified changes over 3–4 years in soils, abundance and richness of species with differing habitat associations (meadow, forest, and ruderal), and recruitment of conifers. Except for a transient increase in available N (especially in burn scars), effects of burning on soils were minimal due, in part, to mixing by gophers. Tree removal greatly benefited meadow species at the expense of forest herbs. Cover and richness of meadow species increased by 47% and 38% of initial values in unburned plots, but changed minimally in burned plots. In contrast, cover and richness of forest herbs declined by 44% and 26% in unburned plots and by 79% and 58% in burned plots. Ruderal species and conifer seedlings were uncommon in both treatments. Although vegetation was consumed beneath burn piles, meadow species recovered significantly after three years. Long-term tree presence did not preclude recovery of meadow species; in fact, colonization was greater in older than in younger forests. In sum, temporal trends were positive for most indicators, suggesting strong potential for restoration. Contrary to conventional wisdom, tree removal without fire may be sufficient to shift the balance from forest to meadow species. In meadows characterized by historically infrequent fire, small-scale disturbances and competitive interactions may be more critical to ecosystem maintenance and restoration. Managers facing the worldwide phenomenon of tree invasion should critically evaluate the ecological vs. operational need for fire in ecosystem restoration.