Abstract Wet forest ecosystems in temperate regions have been heavily drained and logged, often with significant negative consequences for biodiversity in these habitats. Our research focused on population maintenance mechanisms of a declining wet forest sedge Carex loliacea L. We studied germination under different light regimes and seedling survival under different vegetation densities using an in situ removal experiment. For successful germination, seeds of C. loliacea need light; germination in reduced light conditions is depressed. The seeds of C. loliacea are able to accumulate a seed bank and exhibit seasonal dormancy cycles. Survival of seedlings strongly depends on competition with other plant species. Our results imply that changes in habitat conditions (draining, forest cutting) affect the successful generative reproduction of C. loliacea primarily via a change in light conditions, which is a strong factor both at the stage of germination and seedling growth. However, adult plants are able to persist over a much broader range of habitat conditions without detectable vitality loss.