<p>Subtropical wetlands play an important role in maintaining biodiversity, yet important gaps remain in understanding how dominant native macrophytes and environmental filters are associated with plant community structure. We evaluated how structural attributes of <i>Cyperus byssaceus</i> and environmental variables are associated with the richness and composition of aquatic macrophyte communities in wetlands of the South Brazilian Pampa, and we also examined the regenerative potential of the propagule bank. The sampling design included 75 permanent plots (1 m²) for standing vegetation and 45 soil samples integrated by transect (n = 15) for the propagule bank. Species richness was analyzed using Poisson generalized linear models, whereas propagule-bank density was tested using a negative binomial generalized linear model. We recorded 39 species distributed across 21 families. The height of <i>C. byssaceus</i> was negatively associated with local species richness, suggesting that the vertical structure of the dominant species is an important component of local community organization. Floristic composition differed among sites and was associated with the height of the dominant species, water depth, and total soil nitrogen. Propagule-bank density also varied significantly among wetlands (global mean: 6198 ± 566 propagules m⁻²), with Site 3 showing the lowest stock. Evidence of floristic decoupling was observed between the standing vegetation and the propagule bank, as <i>C. byssaceus</i> was not detected in the soil samples, suggesting predominantly vegetative persistence in the sampled wetlands. Overall, our results indicate that community assembly in these wetlands involves both dominant-species structure and environmental conditions, with local richness associated with the vertical structure of <i>C. byssaceus</i>, and floristic composition and regenerative potential varying among wetlands.</p>