In woody species, potential mechanisms to compensate for tissue loss to herbivory and diseases have been related to post-event shifts in growth, biomass and internal resource allocation patterns, as modulated by external resource limitations. We examined the interactive effects of belowground resource limitations by varying nutrient and water availability, and aboveground carbon limitation imposed by a single defoliation event (40% leaf removal) on stem growth, whole-tree and within-tree resource allocation patterns (total non-structural carbohydrate and nitrogen) and below- and aboveground biomass allocation patterns in 8-month-old, field-grown Eucalyptus globulus Labill. saplings. Two months after treatments were imposed, the direction of the stem growth response to defoliation depended on the abiotic treatment. Five months after defoliation, however, we found little evidence that resource availability constrained the expression of tolerance to defoliation. With the exception of the combined low-nutrient and low-water supply treatment, saplings grown with (1) adequate water and nutrient supplies and even with (2) low-water supply or (3) low-nutrient supply were able to compensate for the 40% foliage loss. The observed compensatory responses were attributed to the activation of several short- and longer-term physiological mechanisms including reduced biomass allocation to coarse roots, mobilization of carbohydrate reserves, robust internal N dynamics and increased ratio of foliage to wood dry mass.