We studied the relative importance of local habitat conditions and landscape structure for species richness of vascular plants, bryophytes and lichens in dry grasslands on the Baltic island of Öland (Sweden). In addition, we tested whether relationships between species richness and vegetation cover indicate that competition within and between the studied taxonomic groups is important. We recorded species numbers of vascular plants, bryophytes and lichens in 4 m ² plots (n = 452), distributed over dry grassland patches differing in size and degree of isolation. Structural and environmental data were collected for each plot. We tested effects of local environmental conditions, landscape structure and vegetation cover on species richness using generalized linear mixed models. Different environmental variables explained species richness of vascular plants, bryophytes and lichens. Environmental effects, particularly soil pH, were more important than landscape structure. Interaction effects of soil pH with other environmental variables were significant in vascular plants. Plot heterogeneity enhanced species richness. Size and degree of isolation of dry grassland patches significantly affected bryophyte and lichen species richness, but not that of vascular plants. We observed negative relationships between bryophyte and lichen species richness and the cover of vascular plants. To conclude, effects of single environmental variables on species richness depend both on the taxonomic group and on the combination of environmental factors on a whole. Dispersal limitation in bryophytes and lichens confined to dry grasslands may be more common than is often assumed. Our study further suggests that competition between vascular plants and cryptogams is rather asymmetric.