1. Both environmental filtering and dispersal filtering are known to influence plant species distribution patterns and biodiversity. Particularly in dynamic habitats, however, it remains unclear whether environmental filtering (stimulated by stressful conditions) or dispersal filtering (during re-colonization events) dominates in community assembly, or how they interact. Such a fundamental understanding of community assembly is critical to the design of biodiversity conservation and restoration strategies. 2. Stream riparian zones are species-rich dynamic habitats. They are characterized by steep hydrological gradients likely to promote environmental filtering, and by spatiotemporal variation in the arrival of propagules likely to promote dispersal filtering. We quantified the contributions of both filters by monitoring natural seed arrival (dispersal filter) and experimentally assessing germination, seedling survival and growth of 17 riparian plant species (environmental filter) along riparian gradients of three lowland streams that were excavated to bare substrate for restoration. Subsequently, we related spatial patterns in each process to species distribution and diversity patterns after 1 and 2 years of succession. 3. Patterns in initial seed arrival were very clearly reflected in species distribution patterns in the developing vegetation and were more significant than environmental filtering. However, environmental filtering intensified towards the wet end of the riparian gradient, particularly through effects of flooding on survival and growth, which strongly affected community diversity and generated a gradient in the vegetation. Strikingly, patterns in seed arrival foreshadowed the gradient that developed in the vegetation; seeds of species with adult optima at wetter conditions dominated seed arrival at low elevations along the riparian gradient while seeds of species with drier optima arrived higher up. Despite previous assertions suggesting a dominance of environmental filtering, our results demonstrate that nonrandom dispersal may be an important driver of early successional riparian vegetation zonation and biodiversity patterns as well. 4. Synthesis: Our results demonstrate (and quantify) the strong roles of both environmental and dispersal filtering in determining plant community assemblies in early successional dynamic habitats. Furthermore, we demonstrate that dispersal filtering can already initiate vegetation gradients, a mechanism that may have been overlooked along many environmental gradients where interspecific interactions are (temporarily) reduced.