Annual variability in abiotic factors can be pronounced, especially in systems that rely on precipitation, such as arid regions and prairie potholes. We report how annual variation in precipitation from 1999 to 2002 in the Prairie Pothole Region of Iowa, USA, affected both density and reproduction of two interspecific competitors: yellow-headed blackbirds, Xanthocephalus xanthocephalus (Bonaparte, 1826), and red-winged blackbirds, Agelaius phoeniceus (L., 1766). During dry years, yellow-headed blackbirds, an obligate wetland-breeding species, showed a marked reduction in density and a complete reproductive failure in which none of the nests we monitored fledged young. The reproductive failure was attributed primarily to nest predation, which was negatively correlated with water levels in wetlands. Conversely, red-winged blackbirds, a facultative wetland-breeding species, showed little variation in density and nest success. Both species exhibited similar patterns of reduced clutch size and later nest initiation dates in dry years, measures often tied to bottom-up effects of food availability and (or) age of individuals. Yet top-down effects of nest predation had a stronger influence, because lower clutch size did not result in fewer young fledged per successful nest. Incorporating how rainfall variation can affect wetland songbird demography will be critical for understanding population and community dynamics in changing environments.