Theory predicts that stability should increase with diversity via several mechanisms. We tested predictions in a 5-year experiment that compared low-diversity exotic to high-diversity native plant mixtures under two irrigation treatments. The study included both wet and dry years. Variation in biomass across years (CV) was 50% lower in mixtures than monocultures of both native and exotic species. Growth among species was more asynchronous and overyielding values were greater during and after a drought in native than exotic mixtures. Mean-variance slopes indicated strong portfolio effects in both community types, but the intercept was higher for exotics than for natives, suggesting that exotics were inherently more variable than native species. However, this failed to result in higher CV's in exotic communities because species that heavily dominated plots tended to have lower than expected variance. Results indicate that diversity-stability mechanisms are altered in invaded systems compared to native ones they replaced.