Alien plant invaders significantly threaten native community diversity, although it is poorly understood whether invasion initiates a linear or non-linear loss of resident species. Where low abundances of an invader have little impact on native species diversity, then a threshold level may exist, above which native communities rapidly decline. Our aim was to assess the broadscale effects of an alien thicket-forming shrub, lantana (Lantana camara L.), on wet sclerophyll forest in southeastern Australia. Vascular plant species richness, abundance and composition were measured and compared along a gradient of lantana invasion. There was a strong negative non-linear relationship between native species richness and lantana cover, indicative of an impact threshold. Native species richness remained stable below 75% lantana cover, but declined rapidly above this threshold level, leading to compositional change. Thus, sparse lantana infestations had evidently little effect on the resident community, with impacts elicited at an advanced stage of invasion. The impact of lantana was pervasive, with all major structural groups (i.e. ferns, herbs, shrubs, trees and vines) exhibiting significant species losses; however, the rate of species loss was relatively greater for tree and shrub species, signalling a shift in vegetation structure from tall open forest to low, dense lantana-dominated shrubland. Potentially, broadscale conservation of species diversity could be achieved by maintaining lantana infestations below the 75% cover impact threshold at sites containing regionally common species that are also widely represented in non-invaded vegetation. This would enable targeted invader eradication at sites of high conservation value (i.e. those containing regionally rare species or endangered ecological communities).