Increasing atmospheric carbon dioxide (CO₂) concentrations are likely to influence future distributions of plants and plant community structure in many regions of the world through effects on photosynthetic rates. In recent decades the encroachment of woody mangrove species into herbaceous marshes has been documented along the U.S. northern Gulf of Mexico coast. These species shifts have been attributed primarily to rising sea levels and warming winter temperatures, but the role of elevated CO₂ and water availability may become more prominent drivers of species interactions under future climate conditions. Drought has been implicated as a major factor contributing to salt marsh vegetation dieback in this region. In this greenhouse study we examined the effects of CO₂ concentration (∼380 ppm, ∼700 ppm) and water regime (drought, saturated, flooded) on early growth of Avicennia germinans, a C₃ mangrove species, and Spartina alterniflora, a C₄ grass. Plants were grown in monocultures and in a mixed-species assemblage. We found that neither species responded to elevated CO₂ over the 10-month duration of the experiment, and there were few interactions between experimental factors. Two effects of water regime were documented: lower A. germinanspneumatophore biomass under drought conditions, and lower belowground biomass under flooded conditions regardless of planting assemblage. Evidence of interspecific interactions was noted. Competition for aboveground resources (e.g., light) was indicated by lower S. alterniflora stem biomass in mixed-species assemblage compared to biomass in S. alterniflora monocultures. Pneumatophore biomass of A. germinans was reduced when grown in monoculture compared to the mixed-species assemblage, indicating competition for belowground resources. These interactions provide insight into how these species may respond following major disturbance events that lead to vegetation dieback. Site variation in propagule availability and physico-chemical conditions will determine plant community composition and structure following such disturbances when these two species co-occur.