Resource availability and propagule supply are major factors influencing establishment and persistence of both native and invasive species. Increased soil nitrogen (N) availability and high propagule inputs contribute to the ability of annual invasive grasses to dominate disturbed ecosystems. Nitrogen reduction through carbon (C) additions can potentially immobilize soil N and reduce the competitiveness of annual invasive grasses. Native perennial species are more tolerant of resource limiting conditions and may benefit if N reduction decreases the competitive advantage of annual invaders and if sufficient propagules are available for their establishment. Bromus tectorum, an exotic annual grass in the sagebrush steppe of western North America, is rapidly displacing native plant species and causing widespread changes in ecosystem processes. We tested whether nitrogen reduction would negatively affect B. tectorum while creating an opportunity for establishment of native perennial species. A C source, sucrose, was added to the soil, and then plots were seeded with different densities of both B. tectorum (0, 150, 300, 600, and 1,200 viable seeds m⁻²) and native species (0, 150, 300, and 600 viable seeds m⁻²). Adding sucrose had short-term (1 year) negative effects on available nitrogen and B. tectorum density, biomass and seed numbers, but did not increase establishment of native species. Increasing propagule availability increased both B. tectorum and native species establishment. Effects of B. tectorum on native species were density dependent and native establishment increased as B. tectorum propagule availability decreased. Survival of native seedlings was low indicating that recruitment is governed by the seedling stage.