Understory bamboo species are important and influential components of temperate forests in at least several parts of the world. Here we report a study testing the effect of forest fragmentation on the dynamics of the dwarf bamboo Sasa chartacea and on forest herb communities in the Tokachi plain of Hokkaido, Japan. We studied 16 forest fragments of different sizes and small plots established in these fragments to examine the relationship between the abundance of S. chartacea, landscape and environmental conditions, and forest herb communities. Sasa chartacea was more abundant near forest edges and in smaller fragments, suggesting that the species has expanded its local range and increased its abundance in response to forest fragmentation. Edge-related changes in light and soil moisture might have facilitated this range expansion. The species richness of forest herbs was strongly negatively related to the density of S. chartacea. Because much larger variation in species richness was explained by S. chartacea density than distance to the nearest forest edge, the expansion of S. chartacea has likely excluded other understory species by competition. In addition, the density of S. chartacea significantly explained variation in the species composition of forest herbs across plots. Taken together, our results emphasize the key roles of dwarf bamboos in changing plant communities following forest fragmentation.