Native plant recovery following wildfires is of great concern to managers because of the potential for increased water run-off and soil erosion associated with severely burned areas. Although postfire seeding with exotic grasses or cultivars of native grasses (seeded grasses) may mitigate the potential for increased run-off and erosion, such treatments may also be detrimental to long-term recovery of other native plant species. The degree to which seeded grasses dominate a site and reduce native plant diversity may be a function of the availability of resources such as nitrogen and light and differing abilities of native and seeded grasses to utilize available resources. We tested the hypothesis that seeded grasses have higher growth rates than native grasses when nitrogen and light availability is high in a greenhouse experiment. To determine how differing resource utilization strategies may affect distribution of native and seeded grasses across a burned landscape, we conducted botanical surveys after a wildfire in northern New Mexico, U.S.A., one and four years after the fire. In the greenhouse study we found seeded grasses to produce significantly more biomass than native grasses when nitrogen and light availability was high. Seeded grasses increased in cover from 1–4 years after the fire only in areas where total soil nitrogen was higher. Increased cover of seeded grasses did not affect recovery of native grasses, but it did lead to reduced native species richness at small scales. The potential negative long-term consequences of seeding with exotic grasses should be considered in postfire rehabilitation treatments.