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Abstract Anthropogenic climate change has increased the frequency of drought, wildfire, and invasions of non‐native species. Although high‐severity fires linked to drought can inhibit recovery of native vegetation in forested ecosystems, it remains unclear how drought impacts the recovery of other plant communities following wildfire. We leveraged an existing rainfall manipulation experiment to test the hypothesis that reduced precipitation, fuel load, and fire severity convert plant community composition from native shrubs to invasive grasses in a Southern California coastal sage scrub system. We measured community composition before and after the 2020 Silverado wildfire in plots with three rainfall treatments. Drought reduced fuel load and vegetation cover, which reduced fire severity. Native shrubs had greater prefire cover in added water plots compared to reduced water plots. Native cover was lower and invasive cover was higher in postfire reduced water plots compared to postfire added and ambient water plots. Our results demonstrate the importance of fuel load on fire severity and plant community composition on an ecosystem scale. Management should focus on reducing fire frequency and removing invasive species to maintain the resilience of coastal sage scrub communities facing drought. In these communities, controlled burns are not recommended as they promote invasive plants.