It is often assumed that declines in native vegetation associated with alien plant invasion are driven by competition between plants for limited resources. However, invasion can also impact native plants through recruitment limitation mechanisms. We examined the effects of Cenchrus ciliaris L. (buffel grass, an alien pasture species) on the seed viability and germination of two native perennial shrubs (Acacia tetragonophylla and A. victoriae) in arid woodlands of central Australia. Dormancy, germination rate and seed viability were assessed using laboratory-based germination assays on seeds collected from the soil and mature shrubs in: (1) woodland invaded by buffel grass and (2) areas in which buffel grass had been removed and reinvasion prevented for at least 7 years. There was a twofold increase in viability of A. victoriae seeds in buffel grass-removed compared with invaded sites, and a faster germination rate (T50) for A. tetragonophylla in buffel grass-removed sites. Acacia victoriae seed mass was reduced by approximately 25% in invaded areas, associated with decomposed or absent embryos. Invasion may limit native recruitment by reducing the viability and germination rate of native seeds prior to dispersal from parent plants. Reduced seed viability would reduce seed bank accumulation and total available seed for A. victoriae, while slower germination rates would minimise the efficiency by which A. tetragonophylla responds to sporadic rainfall events. Both mechanisms could lead to long term declines in native plant populations. Reduced seed viability would compound interference of buffel grass on recruiting plants.