The demographic response of indigenous plants to the invasion of exotic woody plants has rarely been quantified, however, could be beneficial to restoration efforts. We determined which life history stages of three indigenous plants: Correa alba var. alba (Rutaceae), Monotoca elliptica (Epacridaceae) and Lomandra longifolia (Lomandraceae), were most affected by the invasion of Chrysanthemoides monilifera spp. rotundata (bitou bush) on the eastern Australian coast. We also assessed whether various morphological and physiological parameters of the mature stage of these species were affected by the presence of bitou bush. Populations of all three indigenous species in bitou bush invaded habitats had significantly fewer small individuals and lower population density than those in non-invaded habitats. The mean flower production, number of vegetative buds, and physiological stress of the mature stage of each of these species in bitou bush invaded habitat did not differ from those present in the non-invaded habitat. We therefore propose that bitou bush affects indigenous plant populations primarily by preventing recruitment through the germination or seedling growth stages. The reduction in indigenous plant recruitment creates spaces that are likely to facilitate bitou bush monoculture formation in the new host environment. Planting of established juvenile plants is suggested to assist in the restoration of bitou bush invaded areas.