1. Variation in climate is predicted to increase over much of the planet this century. Forecasting species persistence with climate change thus requires understanding of how populations respond to climate variability, and the mechanisms underlying this response. Variable rainfall is well known to drive fluctuations in annual plant populations, yet the degree to which population response is driven by between-year variation in germination cueing, water limitation or competitive suppression is poorly understood. 2. We used demographic monitoring and population models to examine how three seed banking, rare annual plants of the California Channel Islands respond to natural variation in precipitation and their competitive environments. Island plants are particularly threatened by climate change because their current ranges are unlikely to overlap regions that are climatically favourable in the future. 3. Species showed 9 to 100-fold between-year variation in plant density over the 5-12 years of censusing, including a severe drought and a wet El Nin??o year. During the drought, population sizes were low for all species. However, even in non-drought years, population sizes and per capita growth rates showed considerable temporal variation, variation that was uncorrelated with total rainfall. These population fluctuations were instead correlated with the temperature after the first major storm event of the season, a germination cue for annual plants. 4. Temporal variation in the density of the focal species was uncorrelated with the total vegetative cover in the surrounding community, suggesting that variation in competitive environments does not strongly determine population fluctuations. At the same time, the uncorrelated responses of the focal species and their competitors to environmental variation may favour persistence via the storage effect. 5. Population growth rate analyses suggested differential endangerment of the focal annuals. Elasticity analyses and life table response experiments indicated that variation in germination has the same potential as the seeds produced per germinant to drive variation in population growth rates, but only the former was clearly related to rainfall. 6. Synthesis. Our work suggests that future changes in the timing and temperatures associated with the first major rains, acting through germination, may more strongly affect population persistence than changes in season-long rainfall. ?? 2008 The Authors.