Native species’ response to the presence of invasive species is context specific. This response cannot be studied in isolation from the prevailing environmental stresses in invaded habitats such as seasonal drought. We investigated the combined effects of an invasive shrub Lantana camara L. (lantana), seasonal rainfall and species’ microsite preferences on the growth and survival of 1105 naturally established seedlings of native trees and shrubs in a seasonally dry tropical forest. Individuals were followed from April 2008 to February 2010, and growth and survival measured in relation to lantana density, seasonality of rainfall and species characteristics in a 50 ha permanent forest plot located in Mudumalai, southern India. We used a mixed effects modelling approach to examine seedling growth and generalized linear models to examine seedling survival. The overall relative height growth rate of established seedlings was found to be very low irrespective of the presence or absence of dense lantana. 22- month growth rate of dry forest species was lower under dense lantana while moist forest species were not affected by the presence of lantana thickets. 4-month growth rates of all species increased with increasing inter-census rainfall. Community results may be influenced by responses of the most abundant species, Catunaregam spinosa, whose growth rates were always lower under dense lantana. Overall seedling survival was high, increased with increasing rainfall and was higher for species with dry forest preference than for species with moist forest preference. The high survival rates of naturally established seedlings combined with their basal sprouting ability in this forest could enable the persistence of woody species in the face of invasive species.