Chamaecyparis obtusa Sieb. and Zucc. var. formosana (Hayata) Rehder is the dominant species in the temperate forest of Yuanyang Lake Nature Reserve (YYL), Taiwan. Although downed logs of C. obstusa var. formosana occupy only a small percentage of the forest floor area in YYL, they are important regeneration substrates. Seedlings of this species often grow without competition on the new downed logs, and a few broadleaf trees grow with them. We hypothesized that the bark of the newly fallen logs possesses allelopathic potential that provides a habitat especially suitable for seedling establishment. Eight different seeds including those from Lactuca sativa L. (lettuce), Bidens pilosa (an invasive weed), and six species in YYL were planted on the bark of the downed logs in an incubator for germination tests. Two dominant species in the forest of YYL, C. obtusa var. formosana and Rhododendron formosanum, were able to grow normally, but the others, Pieris taiwanensis, Barthea formosana, Chamaecyparis formosensis, Miscanthus transmorrisonensis, lettuce, and B. pilosa were growth inhibited. A bioactivity-guided isolation was designed to isolate allelochemicals from the bark. Salicylic acid, one of the inhibiting substances, was isolated and identified by gas chromatography/mass spectroscopy (GC/MS), proton nuclear magnetic resonance ((1)H NMR), and infrared (IR). Bioassay of salicylic acid confirmed a phytotoxic effect. The results suggest that the dominance of C. obtusa var. formosana seedlings on bark could be partly due to allelopathy.