We investigated how shelters and competing herbaceous vegetation affected tree growth and water relations during establishment. A bunch-type forage grass was concurrently seeded around 1-year-old bigtooth maple (Acer grandidentatum) and gambel oak (Quercus gambelii) planted in a silt loam field soil. During the second year following planting, irrigation was withheld, and midday water potential was measured twice to determine differences in water stress. At the end of the season, we measured total survival, elongative growth, and leaf area, as well as root growth of trees without competition. In the presence of competing vegetation, trees in shelters were less water stressed by –1.0 MPa than those without shelters. All maples without shelters and with competition died, and oak survival was 28%. Survival of both species in shelters was 86%. All trees without competing vegetation survived, but shelters affected maples differently than oaks. Maples without shelters had multiple stems that resulted in less shoot elongation and coarse roots but higher leaf area than those in shelters, and there were no differences in midday water potential. By contrast leaf area, elongation, and root growth of oaks in shelters were not different from those without shelters, but water potential was less negative. Tree shelters mitigated the effects of competition during establishment, but overall growth in shelters varied with species as oaks did not grow as well as maples.