In southwestern Australia extensive revegetation with perennial plants is required to reverse hydrological imbalance and associated secondary salinity. The effect of a Pinus radiata/Schinus areira belt on soil water relations and crop production on a duplex soil in a medium rainfall area (480 mm) was studied. Root pruning was used to manage tree–crop competition for resources. The tree belt altered the spatial distribution of rainfall and a rain shadow was observed on the leeward side. P. radiata and S. areira reduced soil moisture to a depth of a least 5 m and laterally to a distance of 15 m. This reduced soil moisture buffered against the formation/duration of perched water-tables and groundwater recharge. Buffer strength declined with increasing distance from the trees. P. radiata and S. areira responded differently to root pruning. Sap flux of P. radiata was unaffected by root pruning, whereas, sap flux in S. areira essentially ceased after root pruning. It is suggested that the contrasting response to root pruning was due to the genetic predisposition of each species and environmental conditions. Tree–crop competition for resources reduced wheat growth and grain yield to a distance of 20–30 m from the trees over several years. Partial root pruning sections of the tree belt prior to the break of season reduced, but did not eliminate, tree–crop competition. Data suggested that the crop was moisture limited in pruned sections of the tree belt and that moisture limitation reduced crop growth and grain yield in pruned sections of the tree belt. Increased soil moisture content was not observed in pruned bays until late spring and by the following autumn soil in pruned bays at 10 m from the tree belt was 100 mm wetter than soil in unpruned bays. This increased soil moisture may have implications for crop growth, formation of perched water-tables and groundwater recharge in the second year after root pruning.