Exotic trees have been introduced in various parts of the world for commercial and environmental reasons such as restoring degraded land and regulating the climate. Despite their economic benefits, they have been found to cause habitat loss and fragmentation, affect soil nutrient cycling, and deplete water quality and quantity. This study examined the extent of land use and land cover changes over the past 30 years, as well as the influence of exotic plant species on native grassland plant composition and diversity in Tanzania’s southern highlands. Drivers and the extent of changes were studied using Landsat imagery in 1990, 2000, 2010 and 2020. The study examined understory native plant species in 12 study sites, including grasslands as control sites near exotic plantations. The study used transects and rectangular plots to compare native plant species with those in exotic tree plantations. Trees with a stem diameter at breast height (DBH) of 10 cm or more were documented in 25 x 20 m plots, while shrubs with a DBH of 5 cm or more but less than 10 cm were recorded in 5 x 2 m sub-plots and grass as well as herbs were recorded in sub-sub plots of 2 x 0.5 m. The native plant composition and diversity were compared among exotic plantations (pine, eucalyptus and black wattle) and neighbouring grasslands. The generalised linear model (GLM) calculated the species abundance, while the native plant diversity in exotic plantations and grasslands was compared using a one-way analysis of variance (ANOVA). The study found that native species diversity is negatively impacted by exotic tree plantations, which displace natural grasslands (p < 0.05). Thus, wild medicinal plants, edible foods and habitats for flora and fauna, including pollinators, have decreased. The study recommends that afforestation and reforestation should emphasise native tree species for nature conservation.