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Summary In plant communities, invasion resistance may increase with diversity because empty niche space decreases simultaneously. However, it is not clear if this only applies to exotic species or also to native species arriving at a site with few other native species during community assembly. We tested the latter by transplanting four native species into experimental grassland communities varying in species richness form 1–16 (−60) species. In addition, we tested the hypothesis that invasion is less successful if the invading species belongs to a functional group that is already present in the community. The test invaders included a grass species ( Festuca pratensis , FP), a short ( Plantago lanceolata , PL) and a tall herb species ( Knautia arvensis , KA), and a legume species ( Trifolium pratense , TP). The same four functional groups also occurred alone or in all possible combinations in the different experimental communities. The overall performance of the transplants was negatively related to the logarithm of the species richness of host communities. Plant biomass declined by 58%, 90%, 84% and 62% in FP, PL, KA and TP, respectively, from monocultures to 16‐species mixtures, indicating lower invasiveness of the two herbs than of the grass and the legume. Resident grasses showed a strong negative effect on the performance of all test invaders, whereas resident small and tall herbs had neutral, and resident legumes had positive effects. The case of the legumes indicates that contributions to invasion resistance need not parallel invasiveness. Communities containing resident species of only one functional group were most inhibitive to transplants of the same functional group. These results indicate that invasion resistance of experimental plant communities is related to the degree of niche overlap between resident species and invaders. This niche overlap can be high due to generally low amounts of empty niche space in species‐rich resident communities or due to the occurrence of the same functional group as the one of the invader in the resident community. Stronger within‐ than between‐functional‐group invasion resistance may be the key mechanism underlying diversity effects on invasion resistance in grassland and other ecosystems at large.