In the northern China steppe, overgrazing has decreased the abundance of many species that were originally dominant, but increased the abundance of Artemisia frigida. We aimed to determine whether the adaptive and competitive abilities of A. frigida are associated with allelopathy. Soil nutrient characteristics could not explain the poor growth of the originally dominant species. Volatile compounds released from A. frigida leaves and aqueous extracts (0.025, 0.05, 0.075, 0.10, and 0.15 g ml −1 ) from A. frigida leaves and roots and from soil under A. frigida inhibited seed germination and seedling growth of three dominant species (Leymus chinensis, Stipa krylovii, and Cleistogenes squarrosa). Allelopathic activity varied according to extract concentration, test species, and extract source. Germination was most strongly inhibited in S. krylovii, followed by L. chinensis and then C. squarrosa. Seedling growth was most strongly inhibited in L. chinensis, followed by S. krylovii and then C. squarrosa. Gas chromatography-mass spectrometry analyses of the leaf volatiles identified 27 compounds, primarily monoterpene or sesquiterpene compounds and their oxygencontaining derivatives, such as eucalyptol, beta.-myrcene, 1,6-octadien-3-ol,3,7-dimethyl, 3-carene, bicyclo[2.2.1]heptan-2-one,1,7,7-trimethyl-,(1R), cissabinenehydrate, camphene, and alpha-Pinene. These findings suggest that allelochemicals from A. frigida can modify the surrounding micro-habitat. The responses of target plants to allelopathy of A. frigida may be one reason for changes in plant community succession in the northern China steppe.