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Conspecific negative density dependence is thought to maintain diversity by limiting abundances of common species. Yet the extent to which this mechanism can explain patterns of species diversity across environmental gradients is largely unknown. We examined density-dependent recruitment of seedlings and saplings and changes in local species diversity across a soil-resource gradient for 38 woody-plant species in a temperate forest. At both life stages, the strength of negative density dependence increased with resource availability, becoming relatively stronger for rare species during seedling recruitment, but stronger for common species during sapling recruitment. Moreover, negative density dependence appeared to reduce diversity when stronger for rare than common species, but increase diversity when stronger for common species. Our results suggest that negative density dependence is stronger in resource-rich environments and can either decrease or maintain diversity depending on its relative strength among common and rare species.