1. It has previously been shown that perennial C4 grasses of tallgrass prairie retranslocate up to 30% of shoot nitrogen (N) to rhizomes and roots in response to water stress and that retranslocation contributes to drought-related decreases in shoot N concentration and photosynthetic capacity, resulting in decreased post-drought carbon gain for 1-2 weeks. 2. In this paper the following hypothesis is tested: under N-limited conditions, the benefits of retranslocation may include limiting loss of shoot N to grazing (or fire) during drought, resulting in increased end-of-season whole-plant biomass, N content, and reproduction. All shoot tissue was removed from young N-limited plants either before or after drought, thereby preventing or allowing the opportunity for retranslocation, and the effects of each clipping treatment on biomass and N content after flowering and senescence were determined. 3. In Spartina pectinata, a mesic species that remobilizes 20-30% of shoot N during drought, plants clipped before drought (no retranslocation) had decreased biomass, N content, and tiller (but not seed) production relative to plants clipped after drought. In contrast, Schizachyrium scoparium, a xeric species that retranslocates little shoot N, exhibited decreased biomass, N content, and tiller and seed production in plants clipped after drought: the result of growth-related increases in total shoot N during drought, and thus greater N loss in plants clipped after drought. Time of clipping had no effect on Andropogon gerardii, a species of intermediate drought tolerance that retranslocates ca. 10% of shoot N during drought. 4. These results support the hypothesis that drought-induced shoot N retranslocation to below-ground tissues represents a trade-off between N protection and post-drought carbon assimilation in prairie grasses.