In Australia, distortions and damage of residential buildings caused by tree drying settlement have been widely reported, particularly in areas of expansive or reactive soils. This paper presents the results of two major research projects dealing with trees and expansive clay soils in the Melbourne Metropolitan area. The first project is the long-term field study of the effects of trees on the performance of a building, soil moisture patterns and ground movement in basaltic clay. The second project is a case study of a residential house damaged by expansive soil movement due to tree root drying. The results of long-term field monitoring show that the sap flow rate of a tree closely correlated with solar radiation and greater transpiration occurred during summer. The presence of the tree resulted in an increase in the depth of soil moisture variation. The second study showed that the continuing distortion of the building after it was underpinned was attributable to the drying influence of the tree roots extending 1.5m below the founding depth of the underpins, which was less than 2m.