In the mesic grasslands of the central United States, the shrub Cornus drummondii has undergone widespread expansion in the absence of recurrent fire. We quantified alterations in light, water and N caused by C. drummondii expansion in tall-grass prairie and assessed the hypothesis that these alterations are consistent with models of resource enrichment by woody plants. Responses in graminoid species, particularly the dominant C4 grass Andropogon gerardii, were concurrently evaluated. We also removed established shrub islands to quantify their legacy effect on resource availability and assess the capability of this grassland to recover in sites formerly dominated by woody plants. The primary effect of shrub expansion on resource availability was an 87% reduction in light available to the herbaceous understorey. This reduced C uptake and N use efficiency in A. gerardii and lowered graminoid cover and ANPP at the grass-shrub ecotone relative to undisturbed grassland. Shrub removal created a pulse in light and N availability, eliciting high C gain in A. gerardii in the first year after removal. By year two, light and N availability within shrub removal areas returned to levels typical of grassland, as had graminoid cover and ANPP were similar to those in open grassland. Recovery within central areas of shrub removal sites lagged behind that at the former grass-shrub ecotone. These results indicate that the apparent alternative stable state of C. drummondii dominance in tall-grass prairie is biotically maintained and driven by reductions in light, rather than resource enrichment. Within areas of shrub removal, the legacy effect of C. drummondii dominance is manifest primarily through the loss of rhizomes of the dominant grasses, rather than any long-term changes in resource availability. C. drummondii removal facilitates grassland recovery, but the effort required to initiate this transition is a significant cost of woody plant expansion in mesic grasslands. Prevention of woody plant expansion in remnant tall-grass prairies is, therefore, a preferred management option.