Vegetation zonation patterns in coastal marshes are hypothesized to be the result of both physical stress and competitive interactions. How these patterns may be driven by these factors at different life history stages remains poorly understood. We investigated the relative importance of species tolerance (response to physical stress) and competitive ability in determining the distributions of two dominant marsh species across a salt-fresh marsh interface in the Yellow River Estuary, China. There is a steep gradient in salinity across this interface and Suaeda salsa, an annual, dominates the saline side of the interface, while Phragmites australis, a perennial species, dominates the freshwater side. Using a series of field transplants, we examined the roles of physical stress and competition in mediating this zonation at different life history stages. Suaeda salsa performed well in its home zone, but seedling emergence, seedling survival, adult survival and adult growth were significantly suppressed by competition in the freshwater P. australis zone. Emergence, survival and growth of P. australis were inhibited in the saline S. salsa zone, regardless of neighbor treatments, but it performed well in its home zone. The magnitude of the competitive effect on the performance of S. salsa differed among the life history stages. Competition from P. australis had a much stronger effect on S. salsa seedling emergence and adult growth than on seedling survival and adult survival. Our results reveal that both physical stress and competition contributed to the observed zonation patterns in this marsh system. However, for S. salsa, the effect of competition varied with life-history stage. Insight into these ecological processes is critical to understanding how the zonation pattern in the marsh system is formed and maintained.