The dynamics of invasive species may depend on their abilities to compete for resources and exploit disturbances relative to the abilities of native species. We test this hypothesis and explore its implications for the restoration of native ecosystems in one of the most dramatic ecological invasions worldwide, the replacement of native perennial grasses by exotic annual grasses and forbs in 9.2 million hectares of California grasslands. The long-term persistence of these exotic annuals has been thought to imply that the exotics are superior competitors. However, seed-addition experiments in a southern California grassland revealed that native perennial species, which had lower requirements for deep soil water, soil nitrate, and light, were strong competitors, and they markedly depressed the abundance and fecundity of exotic annuals after overcoming recruitment limitations. Native species reinvaded exotic grasslands across experimentally imposed nitrogen, water, and disturbance gradients. Thus, exotic annuals are not superior competitors but rather may dominate because of prior disturbance and the low dispersal abilities and extreme current rarity of native perennials. If our results prove to be general, it may be feasible to restore native California grassland flora to at least parts of its former range.