Rangeland-based livestock production constitutes a primary source of livelihood for many inhabitants of dryland regions. Their subsistence relies heavily on maintaining the productivity, biodiversity and services of these ecosystems. Harsh environmental conditions (e.g., drought) combined with land use intensification (e.g., overgrazing) make dryland ecosystems vulnerable and prone to degradation. However, the interplay between livestock grazing intensity and aridity conditions in driving the conservation and nutritional value of forage in arid and semi-arid rangelands is still not fully understood. In this study, we performed structural equation models (SEM) to assess the simultaneous direct and indirect effects of livestock grazing intensity and aridity level on community structure, diversity, biomass, forage production, forage C:N ratio and forage fiber composition in two semi-arid Mediterranean rangelands, NE Spain. Not surprisingly, we found that higher livestock grazing intensity led to lower community plant cover, especially when combined with higher aridity. However, both increasing grazing intensity and aridity were associated with higher forage production after one year of grazing exclusion. We did not find any adverse effect of livestock grazing on plant diversity, although plant species composition differed among grazing intensity levels. On the other hand, we found an aridity-driven trade-off in regard of the nutritional value of forage. Specifically, higher aridity was associated with a decrease in the least digestible fiber fraction (i.e., lignin) and an increase in forage C:N ratio. More interestingly, we found that livestock grazing modulated this trade-off by improving the overall forage nutritional value. Altogether, our results provide further insights into the management of semi-arid Mediterranean rangelands, pointing out that maintaining traditional rangeland-based livestock production may be a sustainable option as long as rangeland conservation (e.g., community plant cover) is not severely compromised.