Variation in competitive ability due to variation in soil characteristics is one possible mechanism allowing the local coexistence of plant species. We measured soil water, depth, and nitrogen pools and fluxes in distinct patches of three serpentine grassland species to determine whether soil heterogeneity existed and was correlated with plant species abundance. Through experimental manipulation of species' abundances, we also examined the relative importance of inherent site characteristics vs. plant species' effects in generating heterogeneity in the measured soil characteristics; and measured species' competitive abilities in different patch types. The three common grassland annuals, Calycadenia multiglandulosum, Plantago erecta, and Lasthenia californica, were segregated with respect to the measured soil characteristics. Differences in soil water, soil depth, soil microbial nitrogen, and soil carbon to nitrogen ratio were due to inherent site characteristics, while differences in nitrate availability were strongly affected by the identity of the species currently growing in a soil patch. Furthermore, all species performed significantly better against one other species in the patch type where they are normally most abundant. These results demonstrate that species diversity within this grassland contributes to the coexistence of these species.