Ponderosa pine forests of the southwestern United States were historically characterized by relatively open, parklike stands with a bunchgrass-dominated understory. This forest structure was maintained by frequent, low-intensity surface fires. Heavy livestock grazing, fire suppression, and favorable weather conditions following Euro-American settlement in the late 19th century resulted in a dramatic increase in pine regeneration. Today, many of these forest stands have high stand densities with low understory production, and are susceptible to infrequent, stand-replacing fires. The primary objective of our study was to better characterize the contemporary carbon (C) and nitrogen (N) cycling processes in relatively unmanaged southwestern ponderosa pine stands. We then compared these ecosystem conditions with those of an adjacent stand that had received an ecological restoration treatment that included thinning and prescribed burning. Our results suggest that N availability and aboveground net primary productivity (ANPP) of trees in these forests are low compared to other forests. Restoration treatments decreased ANPP but increased the proportion of ANPP in woody tissues. These treatments also increased soil respiration, water availability, temperature, and net nitrification, but had no effect on net N mineralization and microbial N. We speculate that the understory response to restoration treatments is a key factor affecting the overall ecosystem response in these forests.