Gas exchange and growth of beech seedlings planted in the understory of a recently thinned pinewood were recorded for 2 years. Relative irradiance was assessed by hemispherical photographs taken just after the thinning. Predawn water potential (Ψpd), daily gas exchange and chlorophyll fluorescence were measured several times during the two growing seasons. Maximum values of photosynthesis (A max) and stomatal conductance to water vapour (g wvmax) were established from daily data. Maximum quantum efficiency of PS II was recorded at dawn by taking the variable to maximum chlorophyll fluorescence ratio on dark adapted leaves (F v/F m). In the middle of each summer, leaf nitrogen content and leaf mass per area were evaluated, and height growth and basal area increment were recorded at the end of the season. The thinning treatment removed half the trees and generated around 10% more available relative irradiance (GLF). This was followed by an increase in net photosynthesis at saturating PPFD (A sat) and in maximum stomatal conductance to water vapour (g wvmax). Moreover, specific leaf mass (SLM) and mass based nitrogen content (Nm) showed higher values for seedlings in the thinned stand. In both years, a positive relationship was established between the area based nitrogen content (Na) and maximum net photosynthesis (A max). In 1998, a year with a dry summer, seedlings suffered a significant drop in daily A max irrespective of the thinning regime. This was a response to an increase in stomatal limitation to net photosynthesis, g wvmax reaching the lowest value on dates with the highest drought. A lack of decrease of Fv/Fm confirmed the absence of significant non-stomatal limitation to A as a consequence of photoinhibition after opening the pinewood. A higher maximum quantum efficiency of open PS II centres (Fv/Fm) was registered in seedlings in the thinned stand. The significance of the differences between the treatments was stronger in the second year after thinning. In 1999, a year with frequent summer storms, water availability increased for seedlings growing under the thinned pinewood. Overall, the reduced pine overstory had a positive effect on physiological responses of beech seedlings, which was translated into improved seedling growth.