Invasive exotic weeds pose one of the earth's most pressing environmental problems. Although many invaders completely eliminate native plant species from some communities, ecologists know little about the mechanisms by which these exotics competitively exclude other species. Mycorrhizal fungi radically alter competitive interactions between plants within natural communities, and a recent study has shown that arbuscular mycorrhizal (AM) fungi provide a substantial competitive advantage to spotted knapweed, Centaurea maculosa, a noxious perennial plant that has spread throughout much of the native prairie in the northwestern U.S. Here we present evidence that this advantage is potentially due to mycorrhizally mediated transfer of carbon from a native bunchgrass, Festuca idahoensis, to Centaurea. Centaurea maculosa, Festuca idahoensis (Idaho fescue, C3), and Bouteloua gracilis (blue gramma, C4) were grown in the greenhouse either alone or with Centaurea in an incomplete factorial design with and without AM fungi. Centaurea biomass was 87–168% greater in all treatments when mycorrhizae were present in the soil (P < 0.0001). However, Centaurea biomass was significantly higher in the treatment with both mycorrhizae and Festuca present together than in any other treatment combination (P < 0.0001). This high biomass was attained even though Centaurea photosynthetic rates were 14% lower when grown with Festuca and mycorrhizae together than when grown with Festuca without mycorrhizae. Neither biomass nor photosynthetic rates of Centaurea were affected by competition with the C4 grass Bouteloua either with or without mycorrhizae. The stable isotope signature of Centaurea leaves grown with Festuca and mycorrhizae was more similar to that of Festuca, than when Centaurea was grown alone with mycorrhizae (P = 0.06), or with Festuca but without mycorrhizae (P = 0.09). This suggests that carbon was transferred from Festuca to the invasive weed. We estimated that carbon transferred from Festuca by mycorrhizae contributed up to 15% of the aboveground carbon in Centaurea plants. Our results indicate that carbon parasitism via AM soil fungi may be an important mechanism by which invasive plants out compete their neighbors, but that this interaction is highly species-specific.