We tested the hypothesis that the amount of compensatory growth after defoliation is affected by the level of stress at which plants grow when defoliated and by the length of time for recovery. Growth response to defoliation went from partial compensation when plants were growing at high relative growth rates (RGR) to overcompensation when plants were more stressed and growing at low RGR. Defoliation released plants from the limitation imposed by the accumulation of old and dead tissue and this release overrode the negative effect of biomass loss. Compensatory growth resulted from a higher RGR aboveground that was not associated with a reduction in RGR belowground. Time available for recovery had a major impact on the outcome of defoliation. With a short time for recovery, RGR was decreased by defoliation because an immediate increase in net assimilation rate was overridden by a reduction in the ratio of leaf area to plant weight. After defoliation, this ratio increased quickly due to a larger allocation to leaf growth and lower leaf specific weights, resulting in higher RGR. We conclude that the compensatory response to grazing depends on the type and level of stress limiting growth. Allocation and physiological responses to stress may positively or negatively affect the response to grazing and, simultaneously, grazing may alleviate or aggravate the effects of different types of stress.