South American Polylepis mountain forests are endangered due to centuries of logging, fire clearance, and intensive livestock grazing. Polylepis australis (Rosaceae) dominates the tree canopy in the Central Argentinean Mountains, where livestock have been excluded or reduced to very low densities over wide areas. Lowered plant and bird diversity in these abandoned grazing areas suggest that some livestock grazing may be beneficial for conservation purposes. Our study aimed to determine whether this may also be true for forest regeneration. In 300 plots of 1 m2 distributed in sub-regions of high to moderate grazing pressure as well as grazing exclusion, we recorded the presence of P. australis seedlings and grazing indicators. Topographical parameters as well as vegetation and soil characteristics were also assessed. Seedling frequencies were highest in the region with moderate grazing, intermediate with grazing exclusion, and the lowest with high grazing pressures. Logistic regression models revealed that seedling occurrence was highest close to seeder trees, with intermediate litter coverage and at intermediate altitudes above sea level. Since grazing ultimately affects seeder tree occurrence through browsing and reduces litter cover and predominates in higher areas, we conclude that grazing is an important driving factor for P. australis regeneration. We confirm previous studies determining high grazing pressure to be detrimental for P. australis regeneration, but also provide data suggesting that its complete exclusion may not be recommendable either. Management should aim to alternate between a moderate grazing intensity to promote seedling recruitment, with subsequent exclusion to accelerate the growth of the established seedlings.