The persistence of relatively fire-sensitive mulga (Acacia aneura F.Muell. ex Benth., Mimosaceae) shrublands within a landscape matrix of highly flammable spinifex (Triodia spp. R.Br., Poaceae) hummock grassland is a central question in the ecology of semiarid Australia. It is also a special case of questions about the coexistence of grasses and woody plants that have general application in semiarid rangelands and tropical savannas. With the use of field surveys and a 24-year fire history, we examined their coexistence on a sandplain in the Tanami Desert, Northern Territory, Australia. Mulga and spinifex each formed discrete monodominant stands with generally abrupt boundaries that did not correspond to obvious edaphic or topographic discontinuities. Spinifex hummock grasslands burnt almost three times as often as mulga shrublands and tended to occur on lighter soils with less biological crusting and more physical soil crusting. A combination of fire and soil variables described the environmental partitioning better than did either alone. Biological crusting increased with time since fire in both vegetation types. The demographic structure of mulga stands reflected their fire history, the more frequently burnt stands comprising almost entirely small plants. One fifth of mulga plants <0.5 m tall were resprouts. Our data provide support for the hypothesis that abrupt boundaries between mulga shrublands and spinifex hummock grasslands can be generated across diffuse environmental gradients by fire–soil–vegetation feedback loops. The oft-severe demographic impact of fire on mulga that is burnt raises questions about the appropriateness of frequent intense fires in this landscape.