As the climate warms, drought will increasingly occur under elevated temperatures, placing forest ecosystems at growing risk of extensive dieback and mortality. In some cases, increases in tree density following early 20th-century fire suppression may exacerbate this risk. Treatments designed to restore historical stand structure and enhance resistance to high-severity fire might also alleviate drought stress by reducing competition, but the duration of these effects and the underlying mechanisms remain poorly understood. To elucidate these mechanisms, we evaluate tree growth, mortality, and tree-ring stable-carbon isotope responses to stand-density reduction treatments with and without prescribed fire in a ponderosa pine forest of western Montana. Moderate and heavier cutting experiments (basal area reductions of 35 and 56%, respectively) were initiated in 1992, followed by prescribed burning in a subset of the thinned units. All treatments led to a growth release that persisted to the time of re-sampling. The treatments had little effect on climate-growth relationships, but they markedly altered seasonal carbon-isotope signals and their relationship to climate. In burned and unburned treatments, carbon-isotope discrimination (Δ13C) increased in the earlywood (EW) and decreased in the latewood (LW) relative to the control. The sensitivity of LW Δ13C to late-summer climate also increased in all treatments, but not in the control. Such increased sensitivity indicates that the reduction in competition enabled trees to continue to fix carbon for new stem growth, even when the climate became sufficiently stressful to stop new assimilation in slower-growing trees in untreated units. These findings would have been masked had we not separated EW and LW. The importance of faster growth and enhanced carbon assimilation under late-summer climatic stress became evident in the second decade post-treatment, when mountain pine beetle activity increased locally, and tree mortality rates in the controls of both experiments increased to more than twice those in their respective treatments. These findings highlight that when thinning is used to restore historical forest structure or increase resistance to high-severity fire, there will likely be additional benefits of enhanced growth and physiological activity under climatic stress, and the effects may persist for more than two decades.