1. Biological soil crusts (BSC) are complex biotic aggregates comprised of lichens, cyanobacteria, algae, and other microorganism that are known to differently affect plant development along life cycle by selecting plant functional traits based on species-specific effects. In addition, functional differences between interacting species should modulate their response ability to other environmental factors. Thus, it should be expected that the effects of the BSC on plants will be significantly determined by the own functional diversity in the community.

2. To understand the multiple effects of BSC and the extent to which the functional diversity of interacting plant species can modulate their effects on the development of coexisting species, we applied an experimental approach by manipulating the initial functional diversity of the entire annual plant community and BSC conditions in a common garden trial. We crossed three sorts of assemblages built on the basis of plant stature (combinations of only large, or only small, or diverse sized plant species in pots) with three lichen-dominated BSC disturbance scenarios (intact, or tiny mechanically disaggregated, or absent portions of BSC).

3. Biological soil crusts strongly affected the establishment and development of gypsophilous annual plants in a complex, multifaceted manner, which shifted throughout the plant life cycle. We demonstrated that lichen-dominated BSC could act as a major physical barrier to the establishment of annual plants at a heterogeneous fine spatial scale. Such a restrictive effect was particularly marked in presence of intact BSC. However, after annual plants overcame the restrictions imposed by BSC, the same biotic layer facilitated plant growth and fitness, regardless of its physical integrity, resulting in larger plants producing more fruits.

4. Importantly, our results suggest that the functional diversity structure of the community may also drive growth and fitness of coexisting species by activating alternative coexistence mechanisms such as niche partitioning or competition symmetry. This study highlights the importance of plant neighbourhood features for the performance of interacting species, and confirms a novel, experimental way to explore the effects of community diversity on plants for the interpretation of assembly mechanisms.