1. Non‐native invasive and nitrogen (N)‐fixing plant species can cause large ecosystem‐level impacts, particularly when they differ in functionally important plant traits from native and non N‐fixing species. However, it remains unclear as to whether and how plant invasion status and N fixation ability consistently influence key plant leaf and litter traits, and trait‐driven processes like herbivory and decomposition.

2. We compared leaf and litter traits, leaf palatability and litter decomposability for 41 co‐occurring woody species, including native N‐fixers, native non N‐fixers, invasive N‐fixers and invasive non N‐fixers, from a New Zealand floodplain. We tested the hypotheses that: (i) invasive and N‐fixing species have higher foliar N and specific leaf area, and lower concentrations of defensive phenolics and structural compounds than do native and non N‐fixing species, and (ii) invasive and N‐fixing species generally produce more decomposable litter and palatable foliage than do native and non N‐fixing species.

3. Consistent with our hypotheses, invaders had higher foliar N and N : P ratio, and lower C : N ratio, than did native species. However, in contrast to our hypotheses, foliar phenolics were higher for the invaders while other leaf and litter traits were unaffected by invasion status. Further, N‐fixers had higher N and N : P ratios, and lower C : N ratios than did non N‐fixers, but other leaf and litter traits were unaffected by N fixation ability.

4. Leaf palatability was unaffected by invasion status but was higher for N‐fixers than for non N‐fixers. Litter decomposability was unaffected both by invasion status and N fixation ability. We found a significant positive relationship between leaf palatability and litter decomposability across all species, because similar traits, particularly the C : P ratio and total phenolic concentrations of plant tissues, were correlated with both processes.

5. Our results demonstrate that a small number of key traits, such as C : P ratio and total phenolic concentrations, drive both herbivory and decomposition irrespective of plant invasion status or N fixation ability. As such, they highlight that interspecific differences in particular plant traits, rather than plant functional group memberships based on invasion status and N fixation ability, are more effective in predicting palatability and decomposability.