Like many semiarid grasslands, large montane meadows of the Sierra Nevada Mountains, California (USA) have experienced widespread expansion of woody plants (here Rothrock sagebrush, or Artemisia rothrockii), a reduction in herbaceous species cover, and apparent aridification over the past century. Because soil moisture is an important limiting resource in this system, we investigated the interactive effects of shrub removal and soil moisture on herbaceous species recovery. We conducted replicated shrub removal experiments across four sagebrush habitats that differed in soil moisture, water table depth, and related characteristics (e.g., soil texture, initial total herbaceous cover, and initial shrub biomass). Changes in herb cover after shrub removal were monitored over four years that differed in spring snow pack, a critical source of water in this system. To more directly quantify the effects of soil moisture on shrub–herb competition, shrub removal was combined with experimental water addition in the most xeric habitat and monitored for two years. Total herb cover increased significantly with shrub removal, but the magnitude of this effect varied among years and habitats, and with experimental watering. Regardless of the source of soil moisture variation (i.e., experimental, spatial, or temporal variation), the absolute change in herb cover with shrub removal increased linearly with moisture at the dry end of the gradient (<15% gravimetric soil moisture). An apparent reversal of this trend under wetter conditions was not possible to evaluate due to few data points above 15% soil moisture. Sagebrush growth rates increased with surface soil moisture, suggesting that this woody species can use water sources similar to those used by herbaceous species. In xeric sites dominated by sagebrush, increasing water availability alone is unlikely to increase herb biomass because suppression by shrubs negates the positive effect of watering. Shrub removal alone has the potential to increase herb biomass at mesic sites or during wet years at xeric sites.