Successful reintroduction of species to the ground-layer of disturbed woodlands may require management of competition with adult plants and addressing the potential influence of soil nutrients. We investigated multiple factors that could potentially limit ground-layer restoration in Eucalyptus melliodora–E. blakelyi grassy woodlands with modified ground-layers. We established plots over ground-layers varying in exotic annual and native perennial grass cover. First we investigated relationships between the existing vegetation and soil. Second, we evaluated whether the existing vegetation, soil fertility, and habitat factors, such as distance to trees, were barriers to native grass re-establishment, by adding Poa labrillardieri and Bothriochloa macra seeds to plots with an intact ground-layer, clipped ground-layer, and plots cleared of all vegetation. Soil phosphorous had a positive relationship with exotic cover and a negative relationship with native cover. Clipping vegetation prior to seeding had a negative effect on P. labrillardieri emergence and no effect on B. macra, but survival of both species was greater when seeds were sown close to trees. Both species established better in cleared plots, indicating that competition can inhibit restoration. Bothriochloa macra establishment was low when soil carbon and C3 native grass cover were high. In contrast, B. macra established successfully in areas with high exotic cover and nutrient enriched soil. Poa labrillardieri seedling survival was low in all circumstances. We conclude that under comparable soil conditions it could be more difficult to re-establish additional native grass species in woodland ground-layers dominated by simplified native grass assemblages than those dominated by exotic annual grasses.