AbstractDeveloping sustainable grazing management systems based on perennial species is critical to preventing land degradation in marginal land classes. A field study was conducted from 2002 to 2006 to identify the impacts of deferred grazing (no defoliation of pastures for a period generally from spring to autumn) and fertilizer application on herbage accumulation, soil seed reserve and nutritive value in a hill pasture in western Victoria, Australia. Three deferred grazing strategies were used: short‐term deferred grazing (no defoliation between October and January), long‐term deferred grazing (no defoliation from October to the autumn break) and optimized deferred grazing (withholding time from grazing commenced between annual grass stem elongation and seed head emergence and concluded in February/March). These treatments were applied with two fertilizer levels (with or without fertilizer at 50 kg phosphorus ha−1 and 2000 kg lime ha−1 applied in year 1 only) in a factorial arrangement and two additional treatments: continuous grazing (CG) and no grazing (NG) in year 1. The deferred grazing treatments on average produced herbage dry matter of 4773 kg ha−1, the NG produced 4583 kg ha−1 and the CG produced 3183 kg ha−1 in year 4 (2005–06) of the experiment. Deferred grazing treatments with and without fertilizer application produced an average of 5135 and 4411 kg DM ha−1 respectively. Averaged over 4 years, deferred grazing increased the germinable seed pool of perennial grasses by 200% and annual grasses by 50% (except optimized deferred grazing that considerably decreased the annual grass seed pool) compared with the CG. The best of the deferred grazing strategies increased the digestibility of pastures by 7% compared with the CG. The results demonstrated that deferred grazing from spring to autumn followed by rotational grazing could be an effective tool to increase herbage production and soil seed pool and improve the digestibility of native pastures in the steep hill country of southern Australia.