Understanding priority effects, in which one species in a habitat decreases the success of later species, may be essential for restoring native communities. Priority effects can operate in two ways: size-asymmetric competition and creation of “soil legacies,” effects on soil that may last long after the competitive effect. We examined how these two types of priority effects, competition and soil legacies, drive interactions between seedlings of native and exotic California grassland plants. We established native and exotic communities in a mesocosm experiment. After 5 weeks, we removed the plants from half the treatments (soil legacy treatment) and retained the plants in the other half (priority effect treatment, which we interpret to include both competition and soil legacies). We then added native or exotic seed as the colonizing community. After 2 months, we measured the biomass of the colonizing community. When germinating first, both natives and exotics established priority effects, reducing colonist biomass by 86 and 92%, respectively. These priority effects were predominantly due to size-asymmetric competition. Only exotics created soil legacies, and these legacies only affected native colonizers, reducing biomass by 74%. These results imply that exotic species priority effects can affect native grassland restorations. Although most restorations focus on removing exotic seedlings, amending soil to address soil legacies may also be critical. Additionally, because native species can exclude exotics if given a head start, ensuring that natives germinate first may be a cost-effective restoration technique.