The canopy shade of the Retama species has been widely reported to ameliorate the environmental conditions in the understory, thus facilitating other species' establishment. The shading effect of the native-invasive leguminous shrub Retama monosperma (L.) Boiss on the endangered Thymus carnosus Boiss was analysed to determine a positive or negative net effect. Data was taken in all four seasons, representing contrasting light and water availability in a Mediterranean coastal dune ecosystem (SW Spain). The morphological and physiological status of sun-exposed T. carnosus plants growing in open areas versus shaded plants growing under R. monosperma were measured seasonally. Leaf mass area, leaf area index and pigment content showed typical sun-shade responses. In contrast, sun-exposed T. carnosus displayed higher stem water potential, transpiration rate and water use efficiency, both intrinsic and integrated, denoting low tolerance to the presence of R. monosperma. Five years after the measurements, canopy cover had decreased and mortality was higher in shaded plants, thus confirming the competitive effect of R. monosperma on T. carnosus. R. monosperma arises as a competitor for endangered T. carnosus communities, consequently reinforcing its invasive behaviour. This species-specific shrub study demonstrates that eventual beneficial effects of Retama canopy may be overridden by competition in the understory, particularly in the case of species well-adapted to high light and low water levels.