The role of tree diversity in restored forests and its impact on key ecological processes like growth and resistance to herbivory has become increasingly important. We analyzed height growth and white-tailed deer Odocoileus virginianus browsing damage to saplings of 16 broadleaved tree species in a large-scale (13 ha) reforestation experiment in Maryland, USA, where we manipulated tree diversity in 70 1,225-m2 plots. After four growing seasons, higher plot-level tree richness led to increased deer browsing damage (i.e., associational susceptibility). Despite increased deer damage to saplings in mixed plots, tree richness had no overall effect on sapling height growth. However, diversity–height relationships were related to species functional traits. Light demanding species with large leaves and faster growth rates had reduced heights in mixtures, whereas shade-tolerant, slower-growing species generally had either increased or unchanged height growth in diverse tree communities, likely related to increased canopy closure in mixtures relative to monocultures. We show that tree diversity can improve growth of late successional species despite exacerbated mammalian herbivore damage. By facilitating the establishment of species with a range of life-history strategies, increased tree diversity may enhance ecosystem multi-functionality in the early stages of forest restoration.