Biocontrol organisms are generally applied in an attempt to reduce the vigor of target species and provide native species with an competitive advantage. We tested the effectiveness of a widely used biocontrol moth, Agapeta zoegana (knapweed root moth) for two years in the field and found that it had no significant direct effect on the biomass of Centaurea maculosa (spotted knapweed), one of the most destructive invasive plants in North America. Instead of releasing a native grass from competition, the reproductive output of Festuca idahoensis planted with Centaurea was significantly lower when neighboring Centaurea had been attacked by Agapeta. In a greenhouse experiment, we found that Festuca planted in pots with Centaurea that had been attacked by Trichoplusia ni (another nonnative herbivore) had significantly smaller root systems than when they were planted with Centaurea that were protected from herbivory. Root systems of Centaurea that had been attacked by Trichoplusia exuded higher levels of total sugars, but not total phenols. We hypothesize that moderate herbivory stimulated compensatory growth, induced the production of defense chemicals that also had allelopathic effects, or stimulated root exudates that altered the relationship between Centaurea and Festuca via soil microbes. Our data suggest that herbivory may increase the negative effects of C. maculosa on neighboring plants, and that some biocontrols may have indirect negative effects on native species that are not currently recognized.