Abstract: The responses of Medicago sativa to allelopathic effects of Eucalyptus grandis growing in different soil water conditions was studied using a bioassay method. The effects of E. grandis leaf extracts were examined on M. sativa seed germination and seedlings grown in different soil water conditions [75%, 55%, 40%, 30% FC (field water content)]. Regardless of water condition, E. grandis showed an obvious allelopathic effect on M. sativa. Leaf extracts of E. grandis significantly reduced the germination index of M. sativa, and the index was further reduced with a water reduction in soil used to grow E. grandis. E. grandis that grew in the lower soil water conditions (40% and 30% FC) had a higher concentration of leaf extract that significantly inhibited seedling growth in contrast to the lower concentration of leaf extract, which enhanced the seed germination rate of M. sativa. E. grandis that grew in high soil water conditions (75% and 55% FC) produced a low concentration leaf extract that significantly improved seedling growth of M. sativa, while the high concentration extract enhanced the seed germination rate. A high concentration leaf extract of E. grandis reduced leaf chlorophyll content and root activity of M. sativa seedlings. M. sativa showed a relatively strong resistance to E. grandis leaf extract treatments and could be chosen as a priority species for tree-grass combinations in E. grandis plantations.