Abstract Large tree decline is occurring globally with critical implications for biodiversity and carbon sequestration. Restoration thinning is a potential management action to accelerate tree growth and promote large tree development in forests, yet trials have been limited and results have been mixed. We conducted a large‐scale trial to determine whether restoration thinning could accelerate the development of large trees in river red gum forests in Australia that had experienced widespread woody thickening and a decline of large trees due to long‐term commercial timber harvesting and river regulation. Thinning was conducted on 44 9‐ha plots by removing trees <40 cm diameter from around retained trees at a range of spacings. Initial tree densities ranged from ~260 to ~1860 trees per ha and 8%–86% of trees were removed by thinning. We monitored 1980 trees prior to thinning, and annually for 5 years post‐thinning. We tested the effects of thinning intensity on diameter growth of different sized trees and explored whether long‐ and short‐term water availability affected outcomes. Thinning promoted the growth of small trees <56 cm diameter, especially in drier sites during wet years. Higher thinning intensities reduced the growth rates of large trees (no smaller than 79.5 cm diameter) in wetter sites. For medium‐ and large‐sized trees, long‐ and short‐term water availability were stronger drivers of tree growth than competition due to tree density. Synthesis and applications. Restoration thinning may accelerate tree growth in young river red gum forests where all trees are small. But restoration thinning may be ineffective or detrimental in multi‐aged forests where the goal is to promote the growth rates of trees that are already medium to large in size.