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Abstract The ubiquity of woody plant expansion across many rangelands globally has led to the hypothesis that the global rise in atmospheric carbon dioxide concentration ([CO2]) is a global driver facilitating C3 woody plant expansion. Increasing [CO2] also influences precipitation patterns seasonally and across the landscape, which often results in the prevalence of drought in rangelands. To test the potential for [CO2] to facilitate woody plant growth, we conducted a greenhouse study for 150 days to measure CO2 effects on juveniles from four woody species (Cornus drummondii C.A. Mey., Rhus glabra L., Gleditsia triacanthos L., Juniperus osteosperma Torr.) that are actively expanding into rangelands of North America. We assessed chronic water-stress (nested within CO2 treatments) and its interaction with elevated [CO2] (800 p.p.m.) on plant growth physiology for 84 days. We measured leaf-level gas exchange, tissue-specific starch concentrations and biomass. We found that elevated [CO2] increased photosynthetic rates, intrinsic water-use efficiencies and leaf starch concentrations in all woody species but at different rates and concentrations. Elevated [CO2] increased leaf starch levels for C. drummondii, G. triacanthos, J. osteosperma and R. glabra by 90, 39, 68 and 41%, respectively. We also observed that elevated [CO2] ameliorated the physiological effects of chronic water stress for all our juvenile woody species within this study. Elevated [CO2] diminished the impact of water stress on the juvenile plants, potentially alleviating an abiotic limitation to woody plant establishment in rangelands, thus facilitating the expansion of woody plants in the future.