Hydrology and competition are major determinants of plant zonation patterns in wetlands. We conducted a pot experiment to investigate effects of water levels on plant growth of two dominant species from the Sanjiang Plain (Deyeuxia angustifolia and Carex lasiocarpa) in monoculture and mixtures (i.e., 2:1, 1:1, and 1:2 mixtures of C. lasiocarpa and D. angustifolia). Water level had significant effects on the biomass of both species (p < 0.05). The aboveground biomass of C. lasiocarpa increased with decreasing water level in both monoculture and mixtures and the same was true for belowground biomass in monoculture. Waterlogging (10cm water level) and natural drought reduced the aboveground and belowground biomass of D. angustifolia in monoculture and waterlogging (20 and 10cm water levels) also reduced the aboveground biomass in mixtures. The relative yield of C. lasiocarpa was greater than 1.0 in the 1:1 mixture (t = 3.49) and the 1:2 mixture (t = 6.63) at 20cm water level (i.e., the performance of individuals was better in mixtures than that in the monoculture), and the same was true for D. angustifolia in the 2:1 mixture (t = 10.23) and the 1:1 mixture (t = 4.12) at -10cm water level. The relative yield of C. lasiocarpa increased with increasing water level in the 1:1 and 1:2 mixtures but decreased for D. angustifolia in the 2:1 mixture. Moreover, the species with smaller initial proportion usually had higher relative yield in mixtures. This would tend to promote the coexistence of these two species. Our results suggest that hydrologic regime change has the potential to produce marked influences on plant productivity and ecosystem carbon budget in the Sanjiang Plain. Moreover, competition is an additional important determinant of plant distribution and community structure in this area.