In coastal dunes, shrub encroachment disrupts natural disturbance, and reduces habitat heterogeneity and species composition. In this paper, we implemented a pilot scale trial aimed at restoring coastal dunes affected by the encroachment by the shrub Retama monosperma (hereinafter Retama) as well as strengthening the populations of Thymus carnosus (regionally cataloged as ‘Critically Endangered’). A total 3 ha of Retama shrub was clearcut in two sites with different Retama cover (54 and 72%). The effect of rabbits on vegetation recovery was assessed by placing exclosures both in treated and untreated plots in Spring, 2015. Plant composition, species richness and diversity were evaluated two years after treatments (with and without Retama clearing, and with and without rabbit exclusion). Retama clearing alone did not allow the recovery of plant composition typical of gray dunes two-years after treatments, but resulted in a biodiversity loss within the Retama understorey when rabbits were present. However, Retama clearing resulted in a significant vigor improvement of T. carnosus in the site with the highest density of Retama. Rabbit exclusion significantly increased species richness and Shannon-Wiener diversity index, and allowed the recovery of plant composition typical of gray dunes. The results suggest that shrub encroachment caused by Retama has a long-lasting negative impact on dune vegetation and that periodic clearing should be combined with rabbit exclusion at least during early restoration stages of dune vegetation. To recover the population of T. carnosus, Retama should be prevented from reaching high cover and periodic clearing without rabbit exclusion is suggested.