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Questions: Woody plant encroachment and invasive plants are two critical factors that negatively impact grass‐dominated ecosystems. While studies have extensively investigated these factors individually, research on how invasive species impact the susceptibility of grasslands to encroachment is less common. Using the aspen parkland, an endangered savannah‐type ecosystem, we asked how the presence of a widespread invasive grass in North America, smooth brome (Bromus inermis), impacted the growth and survival of one‐year old trembling aspen (Populus tremuloides) seedlings. We also asked if plant litter was a potential mechanism of inhibition (as has been proposed for brome litter) or coexistence (as has been hypothesized for aspen litter) in this system. Location: Alberta, Canada. Methods: We used a manipulative experimental approach to determine if the survival and subsequent growth of planted aspen seedlings was impacted by the presence of smooth brome and manipulation of litter amount and type. Results: We found that the presence of smooth brome reduced aspen survival by 57% compared to uninvaded habitats, likely mediated by reduced soil moisture, while litter manipulation had no effect on survival. For surviving seedlings, local context had complex impacts on growth; the addition of aspen litter to brome‐invaded communities increased seedling growth while aspen litter additions to native communities resulted in decreased growth. Conclusion: These results suggest that invasion by smooth brome will alter the dynamics of aspen establishment in this system, potentially leading to significant changes to this already endangered landscape. Though smooth brome may serve as a barrier to aspen establishment, accumulation of aspen litter from nearby stands to brome patches could lead to faster growth of seedlings in invaded areas at the edge of existing aspen stands. Our results also suggest more generally that the impact of invasive plants on the establishment of native woody plants can be dependent on litter inputs. [ABSTRACT FROM AUTHOR]