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Where interspecific facilitation favors the establishment of high densities of a beneficiary species, strong intraspecific competition may subsequently impede beneficiary performance. Consequently, the negative influence of intraspecific competition between beneficiary individuals could potentially outweigh the positive influence of interspecific facilitation when, for example, higher densities of a beneficiary are negated by the negative effect of crowding on beneficiary reproduction. The aim of this study was, therefore, to examine the impact of an interspecific interaction on the outcome of intraspecific interactions within the context of plant–plant facilitation. We used the cushion‐forming Azorella selago and a commonly co‐occurring dominant perennial grass species, Agrostis magellanica, on sub‐Antarctic Marion Island as a model system. We assessed the impact of an interspecific interaction (between A. selago and A. magellanica) on the outcome of intraspecific interactions (between A. magellanica individuals), by testing if the impact of A. magellanica density on A. magellanica performance is mediated by its interaction with A. selago. We observed evidence for competition among A. magellanica conspecifics, with a decreasing proportion of A. magellanica individuals being reproductive under higher conspecific density. This negative intraspecific effect was greater on A. selago than on the adjacent substrate, suggesting that the facilitative effect of A. selago changes the intensity of intraspecific interactions between A. magellanica individuals. However, experimentally reducing A. magellanica density did not affect the species' performance. We also observed that the effect of A. selago on A. magellanica was positive, and despite the negative effect of intraspecific density on the proportion of reproductive A. magellanica individuals, the net reproductive effort of A. magellanica (i.e., the density of reproductive individuals) was significantly greater on A. selago than on the adjacent substrate. These results highlight that, in abiotically severe environments, the positive effects of interspecific facilitation by a benefactor species may outweigh the negative effects of intraspecific competition among beneficiaries. More broadly, these results suggest that both positive inter‐ and intraspecific biotic interactions may be key to consider when examining spatial and temporal variation in species' performance. [ABSTRACT FROM AUTHOR]