Hemiparasites are known to influence community structure and ecosystem functioning, but the underlying mechanisms are not well studied. Variation in the impacts of hemiparasites on diversity and production could be due to the difference in the relative strength of two interacting pathways: direct negative effects of parasitism and positive effects on N availability via litter. Strong effects of parasitism should result in substantial changes in diversity and declines in productivity. Conversely, strong litter effects should result in minor changes in diversity and increased productivity. We conducted field-based surveys to determine the association of Castilleja occidentalis with diversity and productivity in the alpine tundra. To examine litter effects, we compared the decomposition of Castilleja litter with litter of four other abundant plant species, and examined the decomposition of those four species when mixed with Castilleja. Castilleja was associated with minor changes in diversity but almost a twofold increase in productivity and greater foliar N in co-occurring species. Our decomposition trials suggest litter effects are due to both the rapid N loss of Castilleja litter and the effects of mixing Castilleja litter with co-occurring species. Castilleja produces litter that accelerates decomposition in the alpine tundra, which could accelerate the slow N cycle and boost productivity. We speculate that these positive effects of litter outweigh the effects of parasitism in nutrient-poor systems with long-lived hemiparasites. Determining the relative importance of parasitism and litter effects of this functional group is crucial to understand the strong but variable roles hemiparasites play in affecting community structure and ecosystem processes.