Allelopathy is an important process in plant communities. The effects of allelopathy on seed germination and seedling development have been extensively investigated. However, the influences of extract soaking time and concentration on the foregoing parameters are poorly understood. Here, we conducted a seed germination assay to determine the allelopathic effects of the donor herbs Achnatherum splendens (Trin.) Nevski, Artemisia frigida Willd., and Stellera chamaejasme L., from a degraded grassland ecosystem in northern China, on lettuce (Lactuca sativa L.) seed germination and early seedling growth. Extract soaking times (12 h or 24 h) did not exhibit significantly different effects on lettuce seed germination or seedling development. However, all aqueous herb extracts inhibited lettuce seed germination and root length (RI < 0) and promoted lettuce shoot length, stem length, leaf length, and leaf width (RI > 0) at both low (0.005 g mL−1) and high (0.05 g mL−1) concentrations. Moreover, A. splendens extracts increased seedling biomass (RI > 0) and synthetical allelopathic effect (SE > 0) at both concentrations. In contrast, both A. frigida and S. chamaejasme extracts had hormesis effects, which stimulate at low concentrations (RI > 0) but inhibit at high concentrations (RI < 0) on seedling biomass and synthetical allelopathic effect (SE). The results suggest that allelopathic potential may be an important mechanism driving the dominance of A. frigida and S. chamaejasme in degraded grasslands. Reseeding allelopathy-promoting species such as A. splendens may be beneficial to grassland restoration. The present study also demonstrated that seedling biomass, root and shoot length, and seed germination rate are the optimal bioindicators in allelopathy assays and could be more representative when they are combined with the results of multivariate analyses.