Habitat fragmentation has far-reaching negative impacts on the environment, resulting in biodiversity loss, soil quality degradation and alteration of water availability. In addition, fragmentation can disrupt ecological processes, potentially facilitating the establishment and spread of invasive plants, which can further harm native arthropod communities and alter their ecosystem dynamics. However, the exact nature of these impacts may vary depending on local conditions. We investigated the impact of fragmentation and milkweed invasion on invertebrate communities in sandy grasslands of forest-steppe habitats in Hungary. We selected 30 grasslands in forest-steppe fragments, varying in size (0.2 to 8.7 ha) and connectivity (Hanski’s connectivity index: 0 to 705). We sampled ground-dwelling arthropods, mainly herbivores (true bugs) and predators (spiders), with pitfall traps and pollinators (wild bees) by direct observations along transects in invaded vs. non-invaded patches (min. of 500 m2) of each fragment. We considered arthropod species’ body size (all groups), dispersal ability and feeding (herbivores and predators) and nesting location and social habit (wild bee) traits in our analyses. In non-invaded patches, the number of monophagous herbivores showed an increasing trend, whereas in invaded fragments, there were more polyphagous individuals with increasing connectivity and fragment size. The dispersal ability of predators was lower as connectivity increased in non-invaded patches but higher in patches invaded by milkweed. We found more ground nesting bees in the invaded patches of small fragments than in large fragments, however, we did not find a significant effect in non-invaded patches. In summary, we often found interacting effects of the studied variables, fragmentation and invasions, generally modifying each other’s effect by filtering for opposite trait levels. The primary objective of restoration projects should be restoring habitat of appropriate size and connectivity and eradicating invasive species while concurrently supporting the revival of native species and their ecological relationships. It is essential to employ adaptive management techniques, including continuous monitoring, to effectively tackle the interaction between fragmentation, invasion, and the preservation of biodiversity.