Protection of biodiversity and restoration of species-rich plant communities rely on an adequate understanding of how diversity is regulated. We studied species diversity patterns and community assembly in a simulated three-year wetland succession using factorial combinations of two nutrient levels, two water levels, and three water level fluctuation regimes. A standard seed mixture of 23 wetland species representing a wide range of plant functional types was sown in each microcosm. We found strong and consistent effects of water depth and nutrient level on species composition, species richness, and biomass, but no clear effect of water level fluctuations. The relationship between biomass and species richness was positive in the infertile range (16 to 204 g m⁻²) but negative in the fertile range (372 to 1156 g m⁻²). This pattern is consistent with the “humped-back model”, with maximum species richness at an above ground biomass between 200 and 250 g m⁻². Increasing species richness in the low fertility range could partly be explained by limited seedling establishment in the harsh environment of nutrient poor and water logged soils. We interpret the decreasing species richness at high fertility as an effect of increasing competitive asymmetry.