In subtropical coastal dune forests of South Africa, the microenvironment of tree seedlings is largely influenced by a pervasive understorey woody herb, Isoglossa woodii. We examined whether the additional shading by I. woodii explains the competitive response of tree seedlings from these forests. Seedlings of four common mid- to late-successional tree species (Diospyros natalensis, Euclea racemosa, Sideroxylon inerme and Apodytes dimidiata) were grown at three densities of I. woodii in a common garden experiment under greenhouse conditions. The seedlings were grown at 1.6% and 13.5% of full sunlight and supplied with 1% and 10% nitrogen in half-strength Hoagland's nutrient solution. Total biomass and biomass allocation parameters were used to measure the competitive response of the seedlings. Seedlings attained maximum biomass at high light and high nutrient levels and showed species- and light-specific responses to biomass of I. woodii neighbours. Seedlings' allocation to roots increased with increasing light levels but decreased at higher nutrient levels. The leaf mass fraction (LMF) response to light and nutrient levels was opposite to that shown by root allocation. Specific leaf area (SLA) and leaf area ratio (LAR) decreased with increasing light conditions but were not responsive to manipulation of nutrients. The presence of I. woodii neighbours reduced LMF whilst the responses of SLA to neighbours depended on the light level and species. Leaf trait responses to manipulation of light conditions, I. woodii neighbour density and soil nutrient concentration are complex but overall demonstrate an overwhelming role of light in influencing seedling establishment in coastal dune forests. The competitive response of these seedlings to low irradiance reiterates the notion of phenotypic clustering at the seedling stage amongst shade tolerant tree species, which promotes seedling persistence and gradual transition into the tree layer. Our results highlight the role of additional understorey shading by the herb stratum in influencing tree recruitment dynamics and ultimately tree community structure in many of Africa's tropical lowland forests.