In forests of the eastern United States, exotic plant invasions can reduce native plant diversity and change ecosystem processes. Many invasive plants colonize forest edge habitat, but little is known about the ability of the exotic annual grass Microstegium vimineum to invade edges compared to interior forest. In particular, the extent of invasion and impact on resident plants might change along the environmental gradient from edge to interior sites. A common garden study was used to test how Microstegium invasion affected six forest understory graminoid species across three experimental light treatments. Contamination of the Microstegium seed stock with seed of the dominant native perennial grass Dichanthelium clandestinum provided the opportunity to study the interaction between the two species across the light treatments. The light treatments shifted the competitive balance between Microstegium and Dichanthelium, with Dichanthelium dominating in full sun, Microstegium dominating in full shade, and the two species producing more similar biomass in part shade. Invasion of resident communities by these two species resulted in a significant reduction in resident community biomass in part shade but not in full sun or full shade. Three of the six resident graminoid species produced significantly less biomass under invaded conditions. Successful management of Microstegium will require that land managers monitor partly shaded and fully shaded forests to locate invading populations. Invasions should be treated quickly to minimize impacts on resident community species.