Non-native foundation species occasionally invade habitats occupied by native foundation species. Little is known, however, about reciprocal effects of native and non-native foundation species and cascading effects on organisms that depend on foundation species. In a 3- factorial field experiment, we tested for: (1) reciprocal effects between the invasive red alga Gracilaria vermiculophylla and two native cooccurring foundation species, the mussel Mytilus edulis and the seagrass Zostera marina; and (2) effects on mobile macro-invertebrates associated with the three foundation species. We found a negative effect of G. vermiculophylla on the above-ground biomass of Z. marina and a positive effect of M. edulis on Z. marina below-ground biomass, but no other significant effects between the three foundation species. Both M. edulis and G. vermiculophylla had positive effects on invertebrate richness and diversity, but Gracilaria also had positive effects on densities of most invertebrate taxa. Additional correlation analyses showed that the abundance of invertebrates increased with the biomass of G. vermiculophylla, indicating density-mediated habitat cascades in invaded seagrass beds. The strong facilitation by G. vermiculophylla could be related to its complex morphology that creates a 3D mosaic of structures and interstitial spaces for different sizes of invertebrates to occupy. Although these results are constrained by the experimental design (one month duration, small plot size, embedded in seagrass meadow, relatively low invader density, invader physically attached with pegs) we suggest that our findings are typical when an invader is structurally complex and mainly occurs in localized patches. © 2013 The Author(s).