Extreme stand density increases have occurred in ponderosa pine forests throughout the western U.S. since the early 20^th Century, with adverse implications for growth, physiological functioning, and mortality risk. Identifying primary stressors on large, old overstory trees in dense forests can inform management decisions to promote resilience and survival. We tested the impact of stand density increase on overstory tree-ring growth, and the relative influence of water and nitrogen, in an old-growth ponderosa pine forest in northern New Mexico subject to variable density increase. We measured annual tree-ring growth and carbon discrimination in trees before stand density increased, in a climatically-similar period post-density increase, and in recent transition to drought. We expected density-driven water stress to drive reduced tree-ring growth in overstory trees in dense stands. We found reduced growth and higher mortality in dense stands, but nitrogen rather than water constrained growth, as determined by carbon isotope discrimination in tree rings, leaf nitrogen concentration, and soil nitrogen supply. In dense stands, less available nitrogen limited photosynthetic rate, leading to reduced assimilation of intracellular ¹³ C and higher discrimination with low tree-ring growth and a reduced relationship with climate. This unexpected result illustrates that a variety of limiting factors can influence forest dynamics, as density-driven nitrogen limitation interacts with water stress to influence tree growth and physiological functioning.