Species coexistence and local-scale species richness are limited by the availability of seeds and microsites for germination and establishment. We conducted a seed addition experiment in seminatural grassland at three sites in southern Switzerland and repeated the experiment in two successive years to evaluate various circumstances under which seed limitation and establishment success affect community functioning. A collection of 144,000 seeds of 22 meadow species including grasses and forbs of local provenance was gathered, and seeds were individually sown in a density that resembled natural seed rain. The three communities were seed limited. Three years after sowing, single species varied in emergence (0-50%), survival (0-69%), and establishment rates (0-27%). One annual and 13 perennial species reached reproductive stage. Low establishment at one site and reduced growth at another site indicated stronger microsite limitation compared to the third site. Recruitment was influenced by differences in abiotic environmental conditions between sites (water availability, soil minerals) and by within-site differences in biotic interaction (competition). At the least water-limited site, sowing resulted in an increase in phytomass due to establishment of short-lived perennials in the second and third years after sowing. This increase persisted over the following two years due to establishment of longer-lived perennials. After sowing in a wetter year with higher phytomass, however, productivity did not increase, because higher intensity of competition in an early phase of establishment resulted in less vigorous plants later on. Due to the generally favorable weather conditions during this study, sowing year had a small effect on numbers of established individuals over all species. Recruitment limitation can thus constrain local-scale species richness and productivity, either by a lack of seeds or by reduced seedling growth, likely due to competition from the established vegetation.