Aim: Climatic conditions exert a strong control on the geographic distribution of many woodland-to-grassland transition zones (or 'tree lines'). Because woody plants have, in general, a weaker cold tolerance than herbaceous vegetation, their altitudinal or latitudinal limits are strongly controlled by cold sensitivity. While temperature controls on the dynamics of woodland–grassland ecotones are relatively well established, the ability of woody plants to modify their microclimate and to create habitat for seedling establishment and growth may involve a variety of processes that are still not completely understood. Here we investigate feedbacks between vegetation and microclimatic conditions in the proximity to woodland–grassland ecotones. Location: We concentrate on arctic and alpine tree lines, the transition between mangrove forests and salt marshes in coastal ecosystems, and the shift from shrubland to grassland along temperature gradients in arid landscapes. Methods: We review the major abiotic and biotic mechanisms underlying the ability of woody plants to alter the nocturnal microclimate by increasing the temperatures they are exposed to. Results: We find that in many arctic, alpine, desert and coastal landscapes the presence of trees or shrubs causes nocturnal warming thereby favouring the establishment and survival of woody plants. Main conclusion: Because of this feedback, trees and shrubs may establish in areas that would be otherwise unsuitable for their survival. Thus, in grassland–woodland transition zones both vegetation covers may be (alternative) stable states of the landscape, thereby affecting the way tree lines may migrate in response to regional and global climate change.