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Shrub encroachment involves abiotic and biotic factors that regulate demographic factors influencing seed production, storage, germination, and subsequent recruitment. In the rangelands of semi-arid and arid Australia, the thorny acacia, Acacia farnesiana (L.) Willd., is apparently encroaching into grasslands and changing the structure, composition, and functioning of native grasslands. The potential for A. farnesiana to expand rapidly in response to changes in land use was examined by quantifying the reproductive output, dispersal, seed-bank density, and germination of seeds of A. farnesiana. Even in the absence of high grazing pressure, low numbers of seeds were produced and these were mainly locally dispersed, although long-distance dispersal via floods could occur. Pre-dispersal seed predation is likely to reduce the seed output, and despite strong physical seed dormancy, soil-stored seed banks were not large. Seed dormancy is broken by scarification but not strongly synergistically with fire or by fire alone, and fire may have a small effect on recruitment. Hence, pulse recruitment seems unlikely given the match between seedling densities and seed-bank density. These patterns suggest that A. farnesiana is unlikely to encroach rapidly into grasslands unless there is widespread landscape disturbance that triggers broad-scale dispersal, such as floods, and or physical scarification of seed.