Both environmental variation and community composition can have important impacts on population and community stability. Understanding effects of these factors can be complicated as they have the potential to interact, and because responses to environmental variation may propagate through communities. We investigated effects of environmental variation and community composition using simple aquatic microcosm communities. All combinations of three species (an autotroph, a mixotroph and a heterotroph) which vary in their reliance on light for growth produced seven community compositions. All community compositions were subjected to a constant and varying light environment. For populations which use light for growth (autotroph and mixotroph populations), stability was influenced by an interaction between community composition and environmental variability. For the heterotroph, community composition and variable light had separate main effects. At the community level, stability varied with community composition, and environmental variability tended to destabilize communities, except where it generated negative covariance between species. For the heterotroph and autotroph, presence of other species drove correlations between population biomass and the environment which otherwise did not exist. Our results support current theory, and tease apart biotic and abiotic influences on population and community stability.