Woody species have increased in abundance in many grassland ecosystems during the last century. To investigate the consequences of Baccharis pilularis encroachment into coastal California grasslands, we established a chronosequence of sites naturally invaded by Baccharis zero to 25 years ago. Increasing above- and below-ground biomass increase along the chronosequence drove increases in ecosystem N sequestration of ~700% and in C storage of over 125%. Colonization by oaks (Quercus agrifolia) and other woody species at sites colonized by Baccharis >15 years ago indicate that the progressive ecosystem changes observed in chronosequence reinforce woody dominance and associated changes at shrub-invaded sites.