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1. The coexistence of leguminous trees and C4 grasses in many African savannas forces competition between these two distinct plant life-forms. The nature of tree - grass coexistence and the consequent competition for resources remains poorly understood.2. We hypothesized that grass suppression of tree seedling growth was due to competition for N in plants not capable of fixing N2 and due to the costs of N2 fixation in those capable of nodulation.3. Growth and N2 fixation of nodulating (Acacia karroo, Acacia nilotica, Acacia tortilis and Acacia nigrescens) and non-nodulating (Acacia ataxacantha Acacia brevispica and Acacia schweinfurthii) Acacia spp. in response to soil characteristics and fertilizer variations in irrigated field experiments were compared. The extent of N2 fixation was determined from δ15N values.4. Grass suppressed the growth of all species, but particularly of the non-nodulating species. The N2-fixing tree seedlings had high tissue N and high water-use efficiencies (WUE, based on 13C) relative to non-nodulating legumes, making the N2-fixing species strong competitors with C4 grasses, which have low tissue N contents and high WUE. The suppression of seedling growth by grass was smaller for plants grown in a soil with 66 mg/kg than in a soil with 9 mg/kg of Bray II P. The tissue N:P ratios (15.1) indicated that P-limitation constrained growth of seedlings in soils with low Bray II P when grass was present, rather than the energetic costs of N2 fixation.5.Synthesis. In Acacia savannas and in the absence of water limitation, competition for N is the main constraint imposed by grass on growth of Acacia seedlings and that the ability to fix N2 overcomes this limitation. However, the growth of N2 fixing Acacias may be additionally limited by grass competition for P.