Woody plant encroachment can increase nutrient resources in the plant-mound zone. After a fire, this zone is often found to be water repellent. This study aimed to understand the effects of post-fire water repellency on soil water and inorganic nitrogen and their effects on plant growth of the introduced annual Bromus tectorum and native bunchgrass Pseudoroegneria spicata. Plots centered on burned Juniperus osteosperma trees were either left untreated or treated with surfactant to ameliorate water repellency. After two years, we excavated soil from the untreated and treated plots and placed it in zerotension lysimeter pots. In the greenhouse, half of the pots received an additional surfactant treatment. Pots were seeded separately with B. tectorum or P. spicata. Untreated soils had high runoff, decreased soilwater content, and elevated NO3eN in comparison to surfactant treated soils. The two plant species typically responded similar to the treatments. Above-ground biomass and microbial activity (estimated through soil CO2 gas emissions) was 16.8-fold and 9.5-fold higher in the surfactant-treated soils than repellent soils, respectably. This study demonstrates that water repellency can influence site recovery by decreasing soil water content, promoting inorganic N retention, and impairing plant growth and microbial activity.