Sparse understory communities, in association with non‐native tree species, are often attributed to allelopathy, the chemical inhibition of a plant by another. However, allelopathy is a difficult ecological phenomenon to demonstrate as many studies show conflicting results. Eucalyptus globulus, a tree native to Australia, is one of the most widely planted trees around the world. Sparse understories are common beneath E. globulus plantations and are often attributed to allelopathy, but the ecological impacts of E. globulus on native plant communities outside Austrialia are poorly understood.

To assess allelopathy as a mechanism of understory inhibition, we tested volatile‐ and water‐soluble leaf extracts from E. globulus, Salvia apiana, and Quercus agrifolia on seed germination of California native plants. We also quantified germination rates and early seedling growth of California native plants grown in soil from E. globulus plantations versus soil from an adjacent native plant community.

Volatile compounds from E. globulus did not significantly reduce germination for any species. Inhibition from water‐soluble E. globulus compounds was comparable to that of a native tree, Quercus agrifolia (10%). Eucalyptus globulus soil supported germination and early seedling growth of native species equal to or better than coastal scrub soil, although species responses were variable.

In contrast to previous studies, our results fail to support the hypothesis that E. globulus chemically inhibits germination of native species. California native plants germinate and grow well in soils from E. globulus plantations, which may have significant implications for management and restoration of land historically occupied by E. globulus plantations.