Aim In Australia, natural grasslands largely occur on fertile clay soils and have consequently been extensively cultivated since European settlement. Other studies have demonstrated that passive restoration of subtropical grassland is possible in environments where there is substantial native remnant vegetation in the surrounding landscape. This study examined a chronosequence of abandoned fields to investigate the recovery of fragmented grassland in a matrix of cultivated land with significant exotic species that may impede succession. Location Darling Downs, Queensland, Australia. Methods In this study we surveyed a chronosequence of ex‐cultivated subtropical grasslands in Queensland's Darling Downs, where only 1% of the original grasslands remain. Floristic surveys were carried out in 80 fallow sites up to 51 years old, and data were compared with 16 previously surveyed remnant grasslands on the same land type. Results Richness of native species increased with time since cultivation and approached, but did not reach, that of remnant grasslands after 51 years, whereas the richness of exotics declined with time since cultivation. Rainfall and grazing positively and negatively affected exotic plant abundance respectively and these factors had no significant direct or indirect effect on the native species richness. In terms of composition, fallow grasslands supported 54% of the native plant species from remnant grasslands after 51 years. The native perennial grasses Dichanthium sericeum and Aristida leptopoda were the only dominant species in the remnants that were present in more than 60% of the fallow grasslands. Of the species from remnants that were “missing” from fallow sites, most were native perennial forbs and grasses. Compositional dissimilarity of fallow grassland to remnant grasslands remained high after 51 years (78%). Grassland species that are uncommon in nearby hill woodlands were preferentially absent in fallow grassland and this partly explains the slow compositional recovery. Conclusion In a highly fragmented landscape, passive restoration is only partially effective. The restoration of grassland is probably enhanced by repositories of native seeds from hill woodlands that are too rocky to cultivate. However, some species may have to be actively reintroduced to achieve complete recovery. In this landscape, where grazing is a dominant land use, exotic species do not seem to impede succession.