Ludwigia decurrens Walter, belonging to the Onagraceae family, is native to southeastern and southcentral USA and has spread quickly, colonizing wetlands in South and Central America, East and South Asia and Africa. Ludwigia decurrens also infests rice paddy fields and causes serious damage to rice production. The phenomenon of allelopathy is often observed in invasive plant species and contributes to their invasive characteristics. However, no information has been made available on the allelopathy of L. decurrens against wetland species, including Oryza sativa (rice), or on its allelochemicals. Aqueous methanol extracts of whole L. decurrens plants showed allelopathic activity against O. sativa and paddy weeds, Echinochloa crus-galli and Monochoria vaginalis in an extract-concentration-dependent manner. Two allelochemicals, loliolide and dehydrololiolide, were isolated from the L. decurrens extracts through a bioassay-guided separation process using O. sativa as the test plant species. Loliolide and dehydrololiolide also suppressed the growth of O. sativa and E. crus-galli in a concentration-dependent manner. Thus, loliolide and dehydrololiolide may be involved in the allelopathy of L. decurrens and may provide a competitive advantage for L. decurrens due to their growth inhibitory activity. However, the inhibitory activity of loliolide was about 3-fold greater than that of dehydrololiolide. These investigations suggest the allelopathy of L. decurrens may play an important role in the invasion of the species into rice paddy fields and other wetlands. This is the first report on the allelopathy of L. decurrens against wetland species and the isolation and identification of the allelochemicals in L. decurrens.