Prosopis juliflora is a highly invasive tree species in semi-arid and arid regions in eastern Africa. Its ability to displace herbaceous and woody species has been attributed to allelopathic effects, but this has rarely been tested in competition experiments on natural soil and experimentally binding potentially allelopathic substances. We tested the effect of soil collected underneath and outside of P. juliflora canopies, or treated with P.julilfora leaf litter, on the survival, growth and competitive ability of three resident tree species in the presence and absence of activated carbon. Survival and growth of tree seedlings was reduced on, compared to seedlings growing on soil collected outside P. juliflora canopies. When activated carbon was added to the soils, seedling performance significantly increased and did not differ anymore from that on soil collected outside P. juliflora canopies. Competition significantly reduced seedling height irrespective of the type of competitor (P. juliflora or resident tree species). There was no significant interaction between soil type and competition, suggesting that the effect of competition was independent of soil type. The results suggest that P. juliflora releases allelochemicals into the soil which have allelopathic effects on resident tree species and that at least part of these allelochemicals originate from leaf material.