1. The invasion of grasslands by woody species is often associated with changes in environmental conditions, but few studies have addressed the impact of climate change on the competitive interactions between tree seedlings and herbaceous vegetation. We examined patterns of growth and morphology in Fraxinus excelsior seedlings germinating in the presence or absence of grass competition (Dactylis glomerata) at either low (380 p.p.m.) or high (645 p.p.m.) atmospheric carbon dioxide (CO(2)), and at two levels of nitrogen (N) nutrition. 2. Elevated CO(2) had a positive effect on Fraxinus dry mass irrespective of N treatment, but the magnitude of growth response was small. In contrast, Dactylis dry mass showed a significant CO(2) x N interaction: no apparent response to elevated CO(2) in the low N treatment compared with a 25% dry mass increase in the high N, high CO(2) treatment. 3. Dactylis and Fraxinus showed greater responses to N compared with CO(2) in terms of dry mass, morphology and biomass allocation. The direction of Fraxinus responses to N varied depending on the trait examined and the grass competition treatment. 4. Both the competitive intensity (C(int)) and the importance of the competition (C(imp)) experienced by Fraxinus seedlings increased with an increase in N availability. Contrary to expectations, elevated CO(2) had no significant effect on either C(int) or C(imp). 5. Plant plasticity may have important implications for the long-term success of tree seedlings in grasslands. Our results suggest that the combination of both grass and tree seedling responses to CO(2) may have indirect benefits for the persistence of woody invaders in high-nutrient grasslands under future atmospheric conditions.