AbstractThe increasing density of woody plants threatens the integrity of grassy ecosystems. It remains unclear if such encroachment can be explained mostly by direct effects of resources on woody plant growth or by indirect effects of disturbances imposing tree recruitment limitation. Here, we investigate whether woody plant functional traits provide a mechanistic understanding of the complex relationships between these resource and disturbance effects. We first assess the role of rainfall, soil fertility, texture, and geomorphology to explain variation in woody plant encroachment (WPE) following livestock grazing and consequent fire suppression across the Serengeti ecosystem. Second, we explore trait‐environment relationships and how these mediate vegetation response to fire suppression. We find that WPE is strongest in areas with high soil fertility, high rainfall, and intermediate catena positions. These conditions also promote woody plant communities characterized by small stature and seed sizes smaller relative to a comparative baseline within the Serengeti ecosystem, alongside high recruit densities (linked to a recruitment‐stature trade‐off). The positioning of species along this “recruitment‐stature axis” predicted woody stem density increase in livestock sites. Structural equation modeling suggested a causal pathway where environmental factors shape the community trait composition, subsequently influencing woody recruit numbers. These numbers, in turn, predicted an area's vulnerability to WPE. Our study underscores the importance of trait‐environment relationships in predicting the impact of human alterations on local vegetation change. Understanding how environmental factors directly (resources) and indirectly (legacy effects and plant traits) determine WPE supports the development of process‐based ecosystem structure and function models.