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We measured the litter chemistry of two co-dominant alpine species, Acomastylis rossii, a forb characterized by a low growth rate and N uptake capacity, and Deschampsia caespitosa, a grass characterized by a high growth rate and N uptake capacity, and examined the effect litter of these two species had on the growth of Deschampsia phytometers in a greenhouse. We also examined the influence of litter from the two species on microbial respiration and immobilization of N, in two separate laboratory microcosm experiments and in the field. We hypothesized that Acomastylis litter would reduce plant growth more than Deschampsia litter, corresponding with either 1) suppression of microbial activity and thus a decrease in N mineralization, or 2) by stimulation of microbial biomass and increasing microbial immobilization of N. Relative to Deschampsia litter, Acomastylis litter had higher total water soluble organic carbon (DOC), and higher total phenolic concentration. Deschampsia litter had 30 times higher carbohydrate (primarily glucose and fructose) concentrations than Acomastylis litter. Soil respiration, microbial biomass N, and consumption of DOC and N were higher with the Acomastylis litter treatment than the Deschampsia litter treatment in experimental microcosms, and both respiration and microbial biomass N were higher in field soils under canopies dominated by Acomastylis relative to those dominated by Deschampsia. These results indicate that phenolics in Acomastylis are a C source for soil microorganisms, rather than an inhibitor of microbial activity. Deschampsia phytometers grew significantly less, had higher root: shoot biomass ratios, and acquired less nitrogen in the Acomastylis litter treatment relative to the control and Deschampsia litter treatments. The results of these experiments indicate that Acomastylis litter influences soil N cycling by increasing microbial activity and N immobilization, which may influence N supply to neighboring plants. This mechanism has the potential to influence competitive interactions between Acomastylis and its neighbors.