Aims: Woody plants are postulated to facilitate understory herbaceous plants in arid and semi-arid environments worldwide, the so-called ‘nurse plant’ effect, but this mechanism. has been little studied in the drylands of New Zealand. Indigenous dryland plants postulated to have grown under woody shrubs in New Zealand before European settlement may benefit from their recovery, or even their replacement by exotic substitutes. The aim of this study was to investigate woody pant facilitation of understory herbaceous plants in dryland New Zealand.
 Study Design: In this study I investigated the effects of canopies of four shrub species – Kunzea serotina, Discaria toumatou, Rosa rubiginosa and Coprosma propinqua – on herbaceous plant species richness, in the presence and absence of rabbit grazing (for K. serotina).
 Place and Duration of Study: The study was conducted in the drylands of Central Otago, New Zealand, from August 2007 to January 2009.
 Results: Herbaceous plant species richness was lower under canopies of K. serotina, possibly because the dense canopy shaded the understorey plants. It was higher under C. propinqua, D. toumatou and R. rubiginosa canopies than in their adjacent open grasslands, but for all three species this effect was seen only in winter. Woody plant canopy protection of understorey herbaceous plants against winter frost may explain the effects. Grazing significantly decreased herbaceous plant species richness. Since D. toumatou, R. rubiginosa and C. propinqua showed facilitative effects on herbaceous plant species richness they are possible agents for the restoration of dryland vegetation.
 Conclusion: I conclude that control of grazing and the protection of these three woody species could be a good management strategy for the maintenance of a predominantly indigenous dryland mixed herbaceous and woody vegetation in Central Otago.