Factors affecting seedling Virola surinamensis (Myristicaceae) survival and growth were investigated on Barro Colorado Island, Panama. Seedlings planted 3 months after germination were monitored in treefall gaps and understory using 2.25 ha irrigated and control plots through the first dry season. During the dry season, irrigated plants in gaps increased total leaf area significantly more than did irrigated plants in the shaded understory. Over the same dry season, control plants in gaps and in the shaded understory lost similar amounts of leaf area. Seedlings in understory were suppressed in stem height and biomass in both irrigated and control plots; these measures were greater in gaps and greatest in irrigated gaps (height). Roots were similar in length in all treatments, but greater in biomass in gaps than understory due to greater proliferation of secondary roots in control and irrigated gaps than in control and irrigated understory. This experiment demonstrates both water and light limitation during the first dry season after germination. V. surinamensis seedlings are capable of survival and modest growth of leaf area in the deep shade of the understory in moist locations; they are severely disadvantaged in shaded understory subject to drought, where most seeds fall and most seedlings establish. The broken canopy of a gap allows shoot and consequently root growth that permits seedlings to survive seasonal drought.