It is widely believed that deciduous tundra-shrub dominance is increasing in the pan-Arctic region, mainly due to rising temperature. We sampled dwarf birch (Betula nana L.) at a northeastern Siberian tundra site and used dendrochronological methods to explore the relationship between climatic variables and local shrub dominance. We found that establishment of shrub ramets was positively related to summer precipitation, which implies that the current high dominance of B. nana at our study site could be related to high summer precipitation in the period from 1960 to 1990. The results confirmed that early summer temperature is most influential to annual growth rates of B. nana. In addition, summer precipitation stimulated shrub growth in years with warm summers, suggesting that B. nana growth may be co-limited by summer moisture supply. The dual controlling role of temperature and summer precipitation on B. nana growth and establishment is important to predict future climate-driven vegetation dynamics in the Arctic tundra.