Allelopathy effect of Prosopis juliflora canopy soil aqueous extracts on tropical grass species such as Cenchrus cillaris, Paspalidium desertorum and Lintonia nutans were tested under in vitro conditions. Leaf litter falling under canopy soil was collected and tested for allelopathic effects of soil aqueous extract under natural conditions. All the soil aqueous extracts showed significantly negative effects on both germination and seedling growth of test grass species. The results showed that seed germination percentage decreased with increasing the level of the concentration as well as canopy distance. In Cenchrus ciliaris grass species showed 41.64 and 28.56% reduction in seed germination with 5 and 10% soil aqueous extract respectively, in 0 to 3 meter canopy distance. Whereas, at the same concentration level, the seed germination percentage was 57 and 53% in 3 to 10 meter canopy distance. A similar trend of reduction in seed germination percentage was also noticed in Paspalidium desertorum and Lintonia nutans grass species. Moreover, this study revealed that seedling growth such as shoot and root length was significantly affected by canopy soil extracts at the highest concentration. The effect of 0 to 3 meter canopy soil extract was the highest, followed by 3 to 10 meter canopy soil extracts. Moreover, at low concentration canopy, soil aqueous extract showed less inhibitory effect as compared with higher concentration. It can conclude that Prosopis juliflora contains water-soluble allelochemicals capable of inhibiting selected grass species and Prosopis is not good for agro ecosystem and biodiversity.