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Summary Tree recruitment in M editerranean ecosystems is strongly limited at the seedling stage by drought. Increasing evidence shows the critical positive role of the canopy nurse effect on seedling survival which results from direct and indirect, positive and negative interactions between species. Most studies, however, have only focused on the effects of tree canopy on water and light, ignoring other critical factors affecting seedling regeneration, such as canopy effects on high temperatures and the competing herb biomass. Here, we evaluate how tree canopy cover and removal of herbs affect the survival and growth of seedlings of two dominant M editerranean Q uercus species during a 3‐year study. We use an integrated model that combines several data sets to quantify and predict regeneration dynamics along environmental gradients of soil moisture, temperature and light. Low soil moisture, increased soil temperature and herb biomass negatively affected seedling survival of both Q uercus species. Seedling growth was positively associated with increasing soil moisture and light. Although tree canopy cover directly facilitated seedling survival in both Q uercus species, it also negatively affected herb biomass and thus indirectly facilitated the survival of Q uercus suber , but not of Q uercus ilex seedlings at low levels of soil moisture. Overall, tree canopies increased seedling survival but not growth during the establishment phase, mainly by ameliorating the effects of low soil moisture and high temperatures. Tree canopy indirectly facilitated survival of Q . suber seedlings by negatively affecting the competing herb layer. Synthesis and applications . To improve tree recruitment and conserve M editerranean Quercus woodlands, the removal of herbs should be integrated into management plans for dry habitats. Interactions between abiotic and biotic factors may also effect the regeneration of these tree species. In particular, a healthy tree canopy will become important for providing conditions to facilitate seedling establishment if these habitats become drier and warmer, as predicted by some climate change scenarios.