Many mechanisms can lead to successful plant invasion, but their importance is often context dependent. One such mechanism is allelopathy: chemical inhibition of neighbouring plants. The importance of allelopathy may be mediated by soil microbiota and environmental conditions, and depend upon the species or functional group affected. To better understand how these factors alter allelopathy and competition, we conducted a combined field and greenhouse experiment focusing on absinthe (Artemisia absinthium). We experimentally introduced absinthe into native grassland via disturbances and collected soil from beneath these plants after three years. We then tested how invaded versus uninvaded field soil, within burned or unburned grassland, affected the performance of absinthe, two forbs (Achillea millefolium and Medicago sativa), and two grasses (Bromus inermis and Elymus lanceolatus) in a greenhouse competition experiment. We included activated carbon and soil sterilization treatments to test for allelopathic and microbial effects. Microbial inhibition, rather than allelopathy, drove competitive interactions. In uninvaded, unburned soil all species were inhibited and absinthe had no competitive effect. However, when absinthe was released from microbial inhibition by soil sterilization or prescribed fire, it suppressed other species. Microbial inhibition was also reduced for all species in invaded soil, suggesting suppression of pathogens by absinthe. Responses also varied between functional groups, with grasses being more vulnerable to microbial inhibition. Our findings highlight the complexity of invasion effects on soils and the potential for feedbacks on invasion outcomes. They also suggest that disturbance may facilitate invasion via effects on both plants and soil microbes.