Grazing by domestic herbivores is the most widespread land use on the planet, and also a major global change driver in grasslands. Yet, experimental evidence on the long-term impacts of livestock grazing on biodiversity and function is largely lacking. Here, we report results from a network of 10 experimental sites from paired grazed and ungrazed grasslands across an aridity gradient, including some of the largest remaining native grasslands on the planet. We show that aridity partly explains the responses of biodiversity and multifunctionality to long-term livestock grazing. Grazing greatly reduced biodiversity and multifunctionality in steppes with higher aridity, while had no effects in steppes with relatively lower aridity. Moreover, we found that long-term grazing further changed the capacity of above- and below-ground biodiversity to explain multifunctionality. Thus, while plant diversity was positively correlated with multifunctionality across grasslands with excluded livestock, soil biodiversity was positively correlated with multifunctionality across grazed grasslands. Together, our cross-site experiment reveals that the impacts of long-term grazing on biodiversity and function depend on aridity levels, with the more arid sites experiencing more negative impacts on biodiversity and ecosystem multifunctionality. We also highlight the fundamental importance of conserving soil biodiversity for protecting multifunctionality in widespread grazed grasslands.