Observations of tussock grasses (mainly Poa species) and tree seedlings (Eucalyptus pauciflora) growing near treeline suggested that the tussocks may physically protect and compete with the tree seedlings. An analysis of nearest neighbour data from sites burnt in 1972–3 showed the there is a minimum separation between seedlings and tussocks, indicating that competition is taking place. Correlation and principal components analyses show that seedlings growing close to tussocks tend to be taller, with fewer stems and leaves than those growing further away. This same trend from tall, few-stemmed individuals to shorter multistemmed individuals also occurs with an increase in altitude. It is concluded that the trend in habit is related to exposure to environmental extremes. The concept of the regeneration niche and its application to E. pauciflora seedlings is discussed.