Does grafting a +1/+1 counter onto a creature with a -1/-1 counter immediately cancel both out?

Whenever a +1/+1 counter and a -1/-1 counter exist on the same permanent at the same time, state-based actions remove one of each as soon as a player would receive priority. This is mandated by CR 704.5q, which says: 'If a permanent has both a +1/+1 counter and a -1/-1 counter on it, N +1/+1 counters and N -1/-1 counters are removed from it, where N is the smaller of the number of +1/+1 counters and -1/-1 counters on it.'

Graft (CR 702.57) lets you move a +1/+1 counter from the grafting creature onto another creature that enters the battlefield. The moment that counter lands on a creature that already has a -1/-1 counter, both counters exist simultaneously on that permanent, and the next time state-based actions are checked, one of each is removed.

This means the net effect is simply that both counters disappear — the creature's power and toughness are unchanged by those counters (they cancel), and the grafting creature loses one +1/+1 counter permanently. Neither counter 'wins'; they annihilate each other exactly.

Example: Your opponent controls a 2/2 Wither creature that dealt damage last turn, leaving a -1/-1 counter on your 3/3 creature (making it effectively 2/2). You control a Simic Initiate with one +1/+1 counter. A new creature enters; you use Graft to move the +1/+1 counter to your 2/2 (countered) creature. State-based actions immediately remove both the +1/+1 and the -1/-1 counter, leaving it as a plain 3/3 again — not a 4/4 or a 2/2.

Note that this check happens automatically before any player can respond further; no player can take actions between the counter being placed and the state-based action removing both counters (CR 704.1, 704.3).