Technical Abstract: Exotic plants are generally considered a serious problem in wildlands around the globe. However, some argue that the impacts of exotic plants have been exaggerated and that biodiversity and other important plant community characteristics are commonly improved with invasion. Thus, disagreement exists among ecologists as to the relationship of exotic plants with biodiversity and native plant communities. A better understanding of the relationships between exotic plants and native plant communities is needed to improve funding allocation and legislation regarding exotic plants, and justify and prioritize invasion management. To evaluate these relationships, 65 shrub-bunchgrass plant communities with varying densities of an exotic annual grass, Taeniatherum caput-medusae (L.) Nevski (medusahead), were sampled across 160,000 ha in southeastern Oregon, United States. Environmental factors were generally not correlated with plant community characteristics when exotic annual grass density was included in models. Plant diversity and species richness were correlated negatively with exotic annual grass density. Exotic annual grass density explained 62% of the variation in plant diversity. All native plant functional groups, except annual forbs, exhibited a negative relationship with T. caput-medusae. The results of this study suggest that T. caput-medusae invasions probably have substantial negative impacts on biodiversity and native plant communities. The strength of the relationships between plant community characteristics and T. caput-medusae density suggests that some exotic plants are a major force of change in plant communities and subsequently threaten ecosystem functions and processes. However, experimental studies are needed to test if annual grass invasion is the cause of these observed correlations.