Vegetation recovery during succession is an important process for ecological restoration of the soil, especially in degraded sandy land. However, the driving mechanisms, such as how a pioneer species competes with other species, is uncertain. In China's Horqin Sandy Land, Artemisia halodendron is an important shrub that is common on semi-fixed dunes, where it replaces Agriophyllum squarrosum during succession, and is an important indicator species of the second stage of dune stabilization. However, how it outcompetes other species is still unclear. In this study, we conducted a seed bank germination experiment using soil from the native habitats of A. halodendron on semi-fixed dunes. We covered the soil with foliage litter of A. halodendron at a range of concentrations. Seed germination and seedling growth were strongly affected by the foliage litter. Seed germination and seedling growth were not harmed by a low concentration (≤50 g m(-2)) of the foliage litter but severely inhibited by high concentrations (≥100 g m(-2)). Strong allelopathy, indicated by decreased germination, increased seedling loss, and decreased plant biomass, appeared during the later stages of germination (after about 20 days of incubation). Our results suggest that as a pioneer shrub during the vegetation succession that occurs during dune stabilization, A. halodendron outcompeted other species through the allelopathic effect of its foliage litter. This helps to explain the patchy distribution and heterogeneity of vegetation communities in the Horqin Sandy Land.