Summary Parasitic plants have major impacts on plant community structure through their direct negative influence on host productivity and competitive ability. However, the possibility that these parasites may also have indirect impacts on community structure (via the mechanism of nutrient‐rich litter input) while long hypothesized, has remained unsupported until now. Using the hemiparasite Rhinanthus minor, we established experimental grassland mesocosms to quantify the impacts of Rhinanthus litter and parasitism across two soil fertility levels. We measured the biomass and tissue nutrient concentration of three functional groups within these communities to determine their physiological response to resource abstraction and litter input by the parasite. We show that Rhinanthus alters the biomass and nutrient status of co‐occurring plants with contrasting effects on different functional groups via the mechanism of nutrient‐rich litter input. Critically, in the case of grass and total community biomass, this partially negates biomass reductions caused directly by parasitism. This demonstrates that the influence of parasitic plant litter on plant community structure can be of equal importance to the much‐reported direct impacts of parasitism. We must consider both positive indirect (litter) and negative direct (parasitism) impacts of parasitic plants to understand their role in structuring plant communities.