Increasing evidence shows that facilitative interaction and negative plant¿soil feedback are driving factors of plant population dynamics and community processes. We studied the intensity and the relative impact of negative feedback on clonal growth and seed germination of Scirpus holoschoenus, a `ring¿ forming sedge dominant in grazed grassland, and the consequences for species coexistence. The structure of aboveground tussocks was described. A Lithium tracer assessed belowground distribution of functional roots. Seed rain and seedling emergence were compared for different positions in relation to Scirpus tussocks. Soil bioassays were used to compare growth on soil taken from inside and outside Scirpus tussocks of four coexisting species (Mentha acquatica, Pulicaria dysenterica, Scirpus holoschoenus and Dittrichia viscosa). We also compared plant performance of dominant plant species inside and outside Scirpus tussocks in the field. The `ring¿ shaped tussocks of S. holoschoenus were generated by centrifugal rhizome development. Roots were functional and abundant under the tillers and extending outside the tussocks. The large roots mats that were present in the inner tussock zone were almost all dead. Seedling emergence and growth both showed a strong negative feedback of Scirpus in the inner tussock zone. Scirpus clonal development strongly reduced grass biomass. In the degenerated tussock zone, Pulicaria and Mentha mortality was lower, and biomass of individual plants and seed production were higher. This positive indirect interaction could be related to species-specific affinity to soil conditions generated by Scirpus, and interspecific competitive release in the degenerated tussock zone. We conclude that Scirpus negative feedback affects its seedling emergence and growth contributing to the development of the degenerated inner tussock zone. Moreover, this enhances species coexistence through facilitative interaction because the colonization of the inner tussock zone is highly species-specific.