Plant litter can alter ecosystems and promote plant invasions by changing resource acquisition, depositing toxins, and transmitting microorganisms to living plants. Transmission of microorganisms from invasive litter to live plants may gain importance as invasive plants accumulate pathogens over time since introduction. It is unclear, however, if invasive plant litter affects native plant communities by promoting disease. Microstegium vimineum is an invasive grass that suppresses native populations, in part through litter production, and has accumulated leaf spot diseases since its introduction to the U.S. In a greenhouse experiment, we evaluated how M. vimineum litter and accumulated pathogens mediated resource competition with the native grass Elymus virginicus. Resource competition reduced biomass of both species and live M. vimineum increased disease incidence on the native species. Microstegium vimineum litter also promoted disease on the native species, suppressed establishment of both species, and reduced biomass of M. vimineum. Nonetheless, interference competition from litter had a stronger negative effect on the native species, increasing the relative abundance of M. vimineum. Altogether, invasive grass litter suppressed both species, ultimately favoring the invasive species in competition, and increased disease incidence on the native species.