Questions: How does fine-scale soil heterogeneity impact on co-occurring species? Which species are advantaged in heterogeneous soils?. Location: Greenhouse experiment using European grassland species, University of Tartu, Estonia. Methods: We grew plant assemblages consisting of 15 species in five soil treatments – comprising three spatially uniform fertility levels (low, medium or high) and two heterogeneous conditions created using checkerboard combinations of low- and high-fertility patches at two spatial scales (6.25 × 6.25 cm or 12.5 × 12.5 cm patches, overall medium fertility). We compared species responses (above-ground biomass) between heterogeneous and homogeneous treatments. Additionally, we compared species responses within low-fertility patches in heterogeneous treatments to the homogeneous treatment of the same fertility. Results: Larger, dominant species were advantaged in heterogeneous compared to homogeneous conditions (with the same or lower overall fertility), whereas the growth and survival of smaller, subordinate species was reduced. Larger, dominant species also had increased above-ground biomass within the low-fertility patches in heterogeneous compared to homogeneous low-fertility conditions, but the opposite was true for smaller, subordinate species. In general, species responses in heterogeneous conditions did not differ from the homogeneous high-fertility treatment, although the heterogeneous conditions had lower overall fertility. Conclusions: In our experimental grasslands, species differed in their responses to fine-scale soil heterogeneity. Patchy resource distribution directly benefits larger, dominant species that can forage among patches and produce more above-ground biomass compared to conditions where the same amount of resources is distributed homogeneously. Smaller, subordinate species that are more likely confined to a uniform soil patch are disadvantaged by heterogeneity due to increased root and shoot competition from neighbouring species. These species-specific responses to fine-scale soil heterogeneity and altered competitive interactions have important implications for plant community structure and productivity.