Volatile compounds from leaf litter of invasive alien Ageratina adenophora are known to inhibit growth of native species in sub-tropical Asia, but there is not much evidence if the litter affects tree species. In particular, the relative importance of airborne inhibition versus belowground effect of invaded soil on tree species is rarely explored. We used A. adenophora uninvaded and invaded soils to follow germination and seedling growth of a native Nepalese tree Schima wallichii (DC.) Korth. in the presence and absence of leaf litter of A. adenophora. We also compared diversity of native species in the uninvaded and invaded sites in Nepal. We found that A. adenophora invasion is associated with lower native species richness and correlated with lower tree canopy cover. Invaded soil and the proximity of A. adenophora leaf litter decreased seed germination rate of S. wallichii. Both invaded soil and leaf litter of the weed inhibited S. wallichii shoot and root biomass accumulation independently of each other. As far as we know, this is the first study to report these two effects simultaneously. In conclusion, belowground effects of A. adenophora invaded soil and airborne effects of leaf litter have a potential to inhibit native tree regeneration in Nepalese Schima–Alnus forests. Maintaining high canopy cover and removing litter of the weed should be tested to control its invasion.