Coastal wetland ecosystems are increasingly threatened by escalating salinity levels, subjecting plants to salinity stress coupled with interactions in the community. Abiotic factors can disrupt the balance between competition and facilitation among plant species. Investigating the effects of different neighboring species and trait plasticity could extend the stress gradient hypothesis and enhance understanding of vegetation distribution and diversity in salt marshes. We conducted a greenhouse experiment and investigated the plastic response of wetland grass Phragmites australis to seven neighboring plants of three functional types (conspecifics, graminoids and forbs) under soil salinity (0 and 10 g/L). Plant height, base diameter, density, leaf thickness, specific leaf area and total and part biomasses were measured. Additionally, the relative interaction index (based on biomass) and the relative distance plasticity index (RDPI) were calculated. Salinity significantly reduced the biomass, height, density and diameter of P. australis. The functional types of neighboring plants also significantly affected these growth parameters. The influence of graminoids on P. australis was negative under 0 g/L, but this negative effect shifted to positive facilitation under 10 g/L. The facilitation effect of forbs was amplified under salinity, both supporting the stress gradient hypothesis. The growth traits of P. australis had a plastic response to salinity and competition, such as increasing belowground biomass to obtain more water and resources. The RDPI was higher under salt conditions than in competitive conditions. The plant-plant interaction response to stress varies with plant functional types and trait plasticity.