Plants may affect the performance of neighboring plants either positively or negatively through interspecific and intraspecific interactions. Productivity of mixed‐species systems is ultimately the net result of positive and negative interactions among the component species. Despite increasing knowledge of positive interactions occurring in mixed‐species tree systems, relatively little is known about the mechanisms underlying such interactions. Based on data from 25‐year‐old experimental stands in situ and a series of controlled experiments, we test the hypothesis that a broadleaf, non‐N fixing species, Michelia macclurei, facilitates the performance of an autotoxic conifer Chinese fir (Cunninghamia lanceolata) through belowground chemical interactions. Chinese fir roots released the allelochemical cyclic dipeptide (6‐hydroxy‐1,3‐dimethyl‐8‐nonadecyl‐[1,4]‐diazocane‐ 2,5‐diketone) into the soil environment, resulting in self‐growth inhibition, and deterioration of soil microorganisms that improve P availability. However, when grown with M. macclurei the growth of Chinese fir was consistently enhanced. In particular, Chinese fir enhanced root growth and distribution in deep soil layers. When compared with monocultures of Chinese fir, the presence of M. macclurei reduced release and increased degradation of cyclic dipeptide in the soil, resulting in a shift from self‐inhibition to chemical facilitation. This association also improved the soil microbial community by increasing arbuscular mycorrhizal fungi, and induced the production of Chinese fir roots. We conclude that interspecific interactions are less negative than intraspecific ones between non‐N fixing broadleaf and autotoxic conifer species. The impacts are generated by reducing allelochemical levels, enhancing belowground mutualisms, improving soil properties, and changing root distributions as well as the net effects of all the processes within the soil. In particular, allelochemical context alters the consequences of the belowground ecological interactions with a novel mechanism: reduction of self‐inhibition through reduced release and increased degradation of an autotoxic compound in the mixed‐species plantations. Such a mechanism would be useful in reforestation programs undertaken to rehabilitate forest plantations that suffer from problems associated with autotoxicity.