Invasive plants significantly threaten native plant biodiversity, yet the mechanisms by which they drive species losses and maintain their own dominance are poorly known. We examined the effects of alien grass invasion (Stenotaphrum secundatum) on (1) abundance and frequency of occurrence, (2) reproductive effort (flowering) and output (fruit production) and (3) soil seed banks for three focal native plants that are characteristic of endangered coastal forest of south-eastern Australia. First, we sampled and compared the foliage cover abundance and frequency (proportion of sites occupied) of the focal natives across invaded and non-invaded (reference) sites (n = 20). We then intensively sampled reproductive effort and output (range of 5–9 sites per species), and density of propagules within the soil (using a standard glasshouse ‘emergence’ method; n = 26) for each species. Invasion was associated with reduced population sizes of all species within the standing vegetation but did not affect population frequency (i.e. proportion of sites where each species was present). Reproductive effort and output were about 75 % lower at invaded than native sites for all species. However, invasion had no effect on propagule densities of the focal natives within the seed bank, despite the substantial reduction in their reproduction. This indicates that the ultimate driver of population declines across invaded landscapes is post-settlement recruitment limitation from the seed bank (e.g. low rates of germination and seedling survival) rather than a reduction in the arrival and storage of propagules at invaded sites. Removal of Stenotaphrum alone might thus be sufficient to stimulate the recovery of native populations from the seed bank.