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Interactions between trees and grasses that influence leaf area index (LAI) have important consequences for savanna ecosystem processes through their controls on water, carbon, and energy fluxes as well as fire regimes. We measured LAI, of the groundlayer (herbaceous and woody plants <1-m tall) and shrub and tree layer (woody plants >1-m tall), in the Brazilian cerrado over a range of tree densities from open shrub savanna to closed woodland through the annual cycle. During the dry season, soil water potential was strongly and positively correlated with grass LAI, and less strongly with tree and shrub LAI. By the end of the dry season, LAI of grasses, groundlayer dicots and trees declined to 28, 60, and 68% of mean wet-season values, respectively. We compared the data to remotely sensed vegetation indices, finding that field measurements were more strongly correlated to the enhanced vegetation index (EVI, r2=0.71) than to the normalized difference vegetation index (NDVI, r2=0.49). Although the latter has been more widely used in quantifying leaf dynamics of tropical savannas, EVI appears better suited for this purpose. Our ground-based measurements demonstrate that groundlayer LAI declines with increasing tree density across sites, with savanna grasses being excluded at a tree LAI of approximately 3.3. LAI averaged 4.2 in nearby gallery (riparian) forest, so savanna grasses were absent, thereby greatly reducing fire risk and permitting survival of fire-sensitive forest tree species. Although edaphic conditions may partly explain the larger tree LAI of forests, relative to savanna, biological differences between savanna and forest tree species play an important role. Overall, forest tree species had 48% greater LAI than congeneric savanna trees under similar growing conditions. Savanna and forest species play distinct roles in the structure and dynamics of savanna–forest boundaries, contributing to the differences in fire regimes, microclimate, and nutrient cycling between savanna and forest ecosystems.