Over the past century, piñon and juniper trees have encroached into sagebrush steppe lands of the interior United States, and managers have for many years removed trees to stimulate the favored understory. While consistent understory response to tree removal in these semiarid lands suggests that trees outcompete other plants for water, no studies have linked increased soil water to understory response after tree removal. We tested the hypothesis that tree removal at six sagebrush steppe sites increased soil water, leading to increased understory plant cover. Using a structural equation model, we found that before tree removal, trees suppressed shrubs (standardized coefficient [SC] = −0.87), perennial deep-rooted (SC = −0.50) and shallow-rooted bunchgrasses (SC = −0.36), but had no influence on cheatgrass. The model explained between 2% (cheatgrass) and 40% (shrubs) of pretreatment cover variation. Measurement of the same plots six years post-treatment showed that most cover variation was due directly to plant growth, with standardized coefficients between 0.51 (perennial shallow-rooted grasses) and 0.72 (cheatgrass). Competition between cheatgrass and perennial deep-rooted grasses was evident, with perennials having twice the influence on cheatgrass than vice-versa (SC = −0.24 vs. −0.11). Spring soil water (wet-degree days) increased significantly after tree removal, measured as cumulative over 6 years (SC = 0.30), and in the early Spring of year six (SC = 0.16). Treatment-induced increase of cumulative Spring wet degree-days explained variation in shrub cover at year 6 (SC = 0.12) and the increase of early Spring wet degree-days at year 6 led to increases in perennial deep-rooted grasses (SC = 0.24) and cheatgrass (SC = 0.23). We detected no influence of Spring wet degree-days on perennial shallow-rooted grasses. The post-treatment model explained between 34% (shallow-rooted perennial grasses) and 69% (deep-rooted perennial grasses) of variation in understory cover. Most variation was explained by re-measurement of the same populations, followed by treatment effects mediated through increased soil water availability, soil factors, and direct effects of the treatment itself. In conclusion, our model is consistent with the a priori hypothesis that additional wet degree-days due to tree removal is a significant mechanism behind observed increases in understory cover.