Conversion from grassland to woody dominated communities has occurred globally. In recent decades, this pattern has been observed on barrier islands on the Virginia Coast Reserve (VCR), where the dominant encroacher is a thicket forming, nitrogen fixing, evergreen shrub Morella cerifera. Thicketization has occurred so rapidly that underlying mechanisms are considered bistable with grass and shrub dominance representing the alternate stable states. Encroaching shrubs in many systems have altered habitats through positive feedbacks that enhance competitive ability. Our research evaluates alternate stable states and positive feedbacks on Hog Island, a barrier island on the VCR. We quantified species composition and cover across gradients of encroachment (landscape) and expansion (local), and measured microenvironmental conditions of air and soil temperatures, soil organic matter content, moisture, and salinity. At both the landscape and local scale, there were dramatic changes in the environment moving from open grassland to shrub thicket, which favors the persistence of M. cerifera. Temperatures are moderated inside the thicket: cooler in the summer and warmer in the winter. Relative to open areas, shrub thickets produced a dense layer of leaf litter; the presence of grasses inside of thickets was reduced to 0% cover. Microenvironmental conditions of temperature, soil moisture and salinity are more variable in transition zones than in grass or shrub states due to greater species composition and varied canopy coverage. Bio-feedbacks brought about by dominant species, as in M. cerifera, lead to stabilization of microenvironment and function to perpetuate those species; thus, a stable state emerges. Understanding these mechanisms of state change and stabilization will improve predictive ability of long-term island level response to climate change and sea level rise and the protection of economically and ecologically valuable wetlands and coastlines.