© 2016, Springer Science+Business Media New York. Fire suppression in many dry forest types has left a legacy of dense, homogeneous forests. Such landscapes have high water demands and fuel loads, and when burned can result in catastrophically large fires. These characteristics are undesirable in the face of projected warming and drying in the western US. Alternative forest and fire treatments based on managed wildfire—a regime in which fires are allowed to burn naturally and only suppressed under defined management conditions—offer a potential strategy to ameliorate the effects of fire suppression. Understanding the long-term effects of this strategy on vegetation, water, and forest resilience is increasingly important as the use of managed wildfire becomes more widely accepted. The Illilouette Creek Basin in Yosemite National Park has experienced 40 years of managed wildfire, reducing forest cover by 22%, and increasing meadow areas by 200% and shrublands by 24%. Statistical upscaling of 3300 soil moisture observations made since 2013 suggests that large increases in wetness occurred in sites where fire caused transitions from forests to dense meadows. The runoff ratio (ratio of annual runoff to precipitation) from the basin appears to be increasing or stable since 1973, compared to declines in runoff ratio for nearby, unburned watersheds. Managed wildfire appears to increase landscape heterogeneity, and likely improves resilience to disturbances, such as fire and drought, although more detailed analysis of fire effects on basin-scale hydrology is needed.