Dry coniferous forests within the wildland—urban interface (WUI) in the northwestern US have experienced long-term drought and increasing bark-beetle infestations. An unexamined factor potentially affecting WUI forests are irrigation channels used to convey water to nearby farms. I studied the effects of two irrigation channels (a downslope, open channel and an upslope, recently enclosed channel) on plant community composition, tree water status and growth, and patterns of bark-beetle mortality in a WUI ponderosa pine/Douglas fir forest experiencing drought. Low-lying swale areas below the recently enclosed, upper channel had extensive down dead wood and showed shifts from mesic understory plant species to more xeric species. Tree density and basal area declined in swale areas below both channels. Ponderosa pine below the enclosed channel showed evidence of water stress (low water potentials) and negative growth responses to the channel enclosure. In contrast, hillslope trees below the open channel had higher growth rates and water potentials compared to trees above that channel. Beetle-kill was highest between the two channels, the area most likely affected by upper channel enclosure. The study provides evidence that plant community composition, tree physiology, and patterns of tree mortality in forests may be affected by irrigation channels interacting with small-scale topography.