Over the past 40–50 years, the woody shrub Melaleuca ericifolia has progressively invaded large areas of Phragmites australis in Dowd Morass, a Ramsar-listed, brackish wetland in south-eastern Australia. To understand the processes underlying this shift we grew Phragmites and Melaleuca alone and together under contrasting sediment organic-matter loadings and salinities. To examine if the capacity of Phragmites to aerate the sediment influenced plant interactions, we also dissipated convective gas flow in some Phragmites plants by perforating their stems. Although Phragmites suppressed the growth of Melaleuca under all conditions, Melaleuca persisted. We did not find Phragmites ramets to be more sensitive to salinity than Melaleuca seedlings. Surprisingly Phragmites did not increase sediment redox and was more sensitive to increased organic-matter loading than Melaleuca. These results do not support the notion that colonisation by Melaleuca was facilitated by a decline in Phragmites at higher salinities or through aeration of the sediments by Phragmites. Seedlings of Melaleuca, however, were easily blown over by wind and it is likely that Phragmites stands shelter Melaleuca during establishment. Although our short-term experiment did not show that Melaleuca was a better competitor, differences in seasonal growth patterns may contribute to a shift in competitive abilities over a longer time scale.