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1. China's Grain for Green Project is a rapid landscape-scale shift in ground cover and land use with significant implications for biodiversity. From 1998 to 2005, we carried out field studies to examine the landscape-level impacts of this project, and to provide a practical example of the successes and failures of a large-scale attempt to restore a vulnerable environment. 2. In a northern part of China's Shaanxi Province, our results indicated that the total vegetation cover in areas covered by this project increased from 29·7% in 1998 to 42·2% in 2005. However, we also found evidence that large-scale afforestation in this vulnerable arid and semi-arid region could increase the severity of water shortages, decrease vegetation cover in afforestation plots, and adversely affect the number of species present. The exclusion of livestock from overgrazed areas and the elimination of cultivation in marginal areas had the biggest effects on the restoration of vegetation cover, whereas tree planting had a strong negative effect in vulnerable areas. 3. Synthesis and applications. In practical terms, the destruction of natural vegetation cover during afforestation should be avoided, as this makes the soil surface more vulnerable to erosion and reduces species diversity. Managers should reduce the intensity of farming and grazing on fragile land rather than relying on afforestation as the primary tool for ecological restoration in arid and semi-arid areas. Afforestation remains a valuable tool but should be limited to the planting of native or other species that will not exacerbate soil water shortages such as stable communities of natural desert steppe, maximum water-use efficiency dwarf shrubs, and possibly even lichen species in more severely degraded environments.