Competitive interactions between native and exotic species have been long recognized as a significant hurdle to efforts to restore native biodiversity in degraded habitats. In the vast majority of grassland habitats in California, exotic annual grasses dominate communities in terms of both cover and biomass. In interior regions of the state, competition from annual grasses has been shown to reduce establishment of native seedlings and also increase mortality of established native individuals. In more mesic habitats such as those in the northern and central coasts, the prospects for native species is more favorable: competitive interactions more consistently favor native perennial grasses. Once established, native stands are able to reduce exotic biomass and resist subsequent invasion by exotic species. Recent research has turned to ways of influencing competitive relationships between native and exotic species through active management in an effort to achieve management goals such as increased native biodiversity. Management strategies – including grazing, prescribed fire and seed addition – have been applied in an effort to influence competitive outcomes in favor of native species at the expense of exotic annual grasses. A mixture of methods that includes the addition of native seeds along with treatments such as grazing or burning that are designed to reduce competitors' growth and survival will have the greatest likelihood of increasing native establishment and survival. On a pessimistic note, some non-native species, such as exotic perennial grasses in coastal habitats, have shown the ability to respond positively to restoration strategies designed to control exotic annual grasses. Restoration projects must guard, therefore, against ushering in a new wave of exotic competitors that present a new suite of challenges to native biodiversity.