Changes in land management and reductions in fire frequency have enabled woody species to increase in grasslands worldwide. Nevertheless, fire is rarely eliminated from grasslands, and for shrubs to survive, they must be able cope with fire and replace aboveground structures. Because new shoots may have more available solar radiation, greater root : shoot ratios, and thus more resources available belowground after fire compared to undisturbed shrub communities, we hypothesized that carbon, nutrient, and water relations may be enhanced in stems compared to those in an undisturbed grassland. However, this same post-fire resource pulse stimulates the grasses and may intensify competitive interactions between shrubs and grasses. To test these predictions, we measured seasonal patterns in net photosynthesis (A), predawn xylem pressure potentials (XPP), leaf nitrogen (N) content, and productivity of Cornus drummondii shoots from shrub patches (islands) of different sizes in mesic grasslands burned annually, burned infrequently, and protected from fire. Seasonal average A was 20% higher (P = 0.016) in burned than in unburned shrubs, regardless of island size. Shrubs in burned sites also produced shoots with higher leaf N than unburned shrubs, and N content was higher in leaves from small islands compared to large islands (P < 0.0001). Burning caused a decrease in late summer predawn XPP in small islands (−3.1 MPa), whereas burned large islands did not differ from unburned shrubs. Post-fire productivity of new shoots was significantly greater compared to shoots in unburned sites. These results indicate that a transient period of high resource availability after fire allows for increased growth and rapid recovery of grassland shrubs. Thus, although fire has a negative effect on aboveground biomass of shrubs, the post-fire increases in resource availability, which enhance growth in the dominant grasses, are also important for recovery of woody species.