AbstractInvasive plants are known to have dramatic and generally negative effects on ecosystems. The rapid spread and naturalization ofCarrichtera annua(wards weed) across large areas of southern Australia has been widely reported, but its effects on biodiversity and ecosystem functions are poorly known. We examined the effects ofCarrichteraon grass‐feeding termitesDrepanotermesspp. and hypothesized that increasing cover ofCarrichterawould reduce termite abundance, which we assessed using the density of their above‐ground pavements as a proxy for density. Our study was conducted at two spatial scales to explore (i) potential effects ofCarrichterainvasion under variable intensities of grazing and (ii) differences between invaded and uninvaded sites at a long‐ungrazed conservation reserve. Increasing cover ofCarrichterawas associated with a greater density of pavements, both under grazed conditions and within the conservation reserve. However, increasing grazing intensity tended to be associated with reduced pavement density and size, through indirect reductions in plant biomass. Greater cover ofCarrichterawas associated with declines in the cover of native plants and biocrusts, but not native plant richness. Pavement size tended to decline with increasing pavement density. Under conservation,Carrichterasites supported more pavements, but densities declined markedly in drought years. The lower resilience to droughts and the fact that pavements inCarrichtera‐invaded sites tended to be less cemented and contain more ants, suggest that invasion byCarrichteramay have long‐term functional implications for processes mediated by termites. Increasingly, drier climates in southern Australia may exacerbate reductions in ecosystem functions given the pivotal role played by termites in dryland food webs and ecosystem functions.