Although grazing is the most common anthropogenic use of grassland, excessive grazing without proper management makes grasslands more likely to be colonized by invasive alien plant species (IAPS) and further deteriorates their quality. Overgrazing followed by community homogenization due to plant invasion in grasslands is an emerging problem in grassland conservation worldwide. In this study, impacts of short-term (two-year) grazing exclusion was investigated on a heavily grazed, Parthenium hysterophorus invaded grassland in south-central Nepal. The soil properties and floristic composition of above- and below- ground vegetation was compared between openly grazing (GO) and grazing excluded (GE) plots. Our results revealed a significant decline in soil bulk density and organic carbon in GE plots due to grazing exclusion. Floristic composition was substantially altered by grazing exclusion, resulting in an enhanced and much more diverse plant community in GE plots. Species evenness was higher in GE plots while species richness and diversity were higher in GO plots in the above-ground vegetation. In the below-ground vegetation, species evenness and species diversity were higher in GE plots. Grazing exclusion lowered relative abundance of P. hysterophorus in the soil seed bank of GE plots, while there was no effect in the above ground vegetation. The more diversified plant community and reduced abundance of P. hysterophorus in the soil seed bank of the GE plots in this study imply that regulated grazing may boost native species and lessen the abundance of IAPS in grasslands with high grazing pressure.