By transferring ecologically important traits between species, plasmids drive genomic divergence and evolutionary innovation in their bacterial hosts. Bacterial communities are often diverse and contain multiple coexisting plasmids, but the dynamics of plasmids in multi-species communities are poorly understood. Here, we show, using experimental multi-species communities containing two plasmids, that bacterial diversity limits the horizontal transmission of plasmids due to the ‘dilution effect’; this is an epidemiological phenomenon whereby living alongside less proficient host species reduces the expected infection risk for a focal host species. In addition, plasmid horizontal transmission was also affected by plasmid diversity, such that the rate of plasmid conjugation was reduced from co-infected host cells carrying both plasmids. In diverse microbial communities, plasmid spread may be limited by the dilution effect and plasmid–plasmid interactions, reducing the rate of horizontal transmission.