Plant invasions are impacting alpine zones, altering key mutualisms that affect ecosystem functions. Plant-mycorrhizal associations are sensitive to invasion, but previous studies have been limited in the types of mycorrhizas examined. Consequently, little is known about how invaders that host rarer types of mycorrhizas may affect community and ecosystem properties. We studied invasion by an ericoid mycorrhizal host plant (Calluna vulgaris L., heather) in alpine tussock grasslands in New Zealand. We investigate the effects of increasing C. vulgaris density on the plant and soil microbial community and on mycorrhization in the dominant native species (Chionochloa rubra Z., red tussock), an arbuscular mycorrhizal host. We show that variation in plant community composition was primarily driven by invader density. High invader densities were associated with reductions in C. rubra diameter and in the cover, richness and diversity of the subordinate plant community. Belowground, we show that higher invader densities were associated with lower rates of mycorrhization in C. rubra and higher proportional abundance of the fungal lipid biomarker 18:2ω6 but had little effect on total microbial biomass, which may suggest increased ericoid mycorrhizal and fine root biomass in high C. vulgaris density stands. Our data suggest that disruption of native plant-arbuscular mycorrhizal networks may contribute to the competitive success of C. vulgaris, and that the dramatic decline of C. rubra with invasion reflects its relatively high mycorrhizal dependence. By exploring invasion of a plant with a less common mycorrhizal type, our study expands knowledge of the ecosystem consequences of biological invasions.