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Lupinus nootkatensis is an exotic plant species that has been used for large‐scale sowing all around Iceland for land reclamation of eroded surfaces protected from livestock grazing.Until the early 1990s, L. nootkatensis was free from any significant arthropod herbivory in Iceland, whereas, after 1991, many outbreaks of native insect species, primarily Ceramica pisi and Eupithecia satyrata, have been recorded. These outbreaks have caused repeated total defoliation of extensive areas of L. nootkatensis, although the effects on its development are mostly unknown.We studied the effect of: (i) reduced herbivory; (ii) increased herbivory; and (iii) simulated increased herbivory, compared with (iv) unmanipulated herbivory, on defoliation and seed production of L. nootkatensis in a 3‐year field study within two sites at contrasting ages and successional stages.The results obtained showed that: (i) seed production across all treatments was negatively related to defoliation; (ii) reduced herbivory had a positive effect on the number of flowering stems and seed yield; and (iii) these effects depended on age and/or the successional stage because they were only significant in the older L. nootkatensis site.These findings indicate that arthropod herbivory may affect the invasiveness of L. nootkatensis in Iceland by reducing the seed production and the spatial distribution rate of late successional lupin communities. [ABSTRACT FROM AUTHOR]