Changes in competitive interactions under conditions of enhanced resource availability could explain the invasion success of some problematic plant species. For one invader of North American grasslands, Centaurea diffusa (diffuse knapweed), we test three hypotheses: (1) under ambient (high resource) conditions, C. diffusa is better able to tolerate competition from the resident community (competitive response), (2) under ambient conditions, C. diffusa strong impacts the competitive environment (competitive effect), and (3) reductions in nitrogen and/or phosphorus availability diminish these advantages. In support of our first hypothesis, C. diffusa was the most tolerant to neighbor competition of the four focal species under current resource conditions. In opposition to our second hypothesis, however, neighborhoods that contained C. diffusa and those where C. diffusa had been selectively removed did not differ in their impact on the performance of target transplant individuals or on resource conditions. Reduction in resource availability influenced competitive tolerance but not competitive impact, in partial support of our last hypothesis. Reduction in soil nitrogen (via sucrose carbon addition) enhanced the degree of neighbor competition experienced by all species but did not change their relative rankings; C. diffusa remained the best competitor under low nitrogen conditions. Reduction of soil phosphorus (via gypsum addition) weakened the ability of C. diffusa to tolerate neighbor competition proportionately more than the other focal species. Consequently, under low phosphorus conditions, C. diffusa lost its competitive advantage and tolerated neighbor competition similarly to the other focal species. We conclude that C. diffusa invasion may be double-edged: C. diffusa is less limited by nitrogen than the other focal species and is better able to utilize phosphorus to its competitive advantage.