Abstract. Forage offtake, leaf biomass and soil organic carbon storage are important ecosystem services of permanent grasslands, which are determined by climatic conditions, management and functional diversity. However, functional diversity is not independent of climate and management, and it is important to understand the role of functional diversity and these dependencies for ecosystem services of permanent grasslands, since functional diversity may play a key role in mediating impacts of changing conditions. Large-scale ecosystem models are used to assess ecosystem functions within a consistent framework for multiple climate and management scenarios. However, large-scale models of permanent grasslands rarely consider functional diversity. We implemented a representation of functional diversity based on the competitor, stress-tolerator and ruderal (CSR) theory and the global spectrum of plant form and function into the Lund Potsdam Jena managed Land (LPJmL) dynamic global vegetation model (DGVM) forming LPJmL-CSR. Using a Bayesian calibration method, we parameterised new plant functional types (PFTs) and used these to assess forage offtake, leaf biomass, soil organic carbon storage and community composition of three permanent grassland sites. These are a temperate grassland and a hot and a cold steppe for which we simulated several management scenarios with different defoliation intensities and resource limitations. LPJmL-CSR captured the grassland dynamics well under observed conditions and showed improved results for forage offtake, leaf biomass and/or soil organic carbon (SOC) compared to the original LPJmL 5 version at the three grassland sites. Furthermore, LPJmL-CSR was able to reproduce the trade-offs associated with the global spectrum of plant form and function, and similar strategies emerged independent of the site-specific conditions (e.g. the C and R PFTs were more resource exploitative than the S PFT). Under different resource limitations, we observed a shift in the community composition. At the hot steppe, for example, irrigation led to a more balanced community composition with similar C, S and R PFT shares of aboveground biomass. Our results show that LPJmL-CSR allows for explicit analysis of the adaptation of grassland vegetation to changing conditions while explicitly considering functional diversity. The implemented mechanisms and trade-offs are universally applicable, paving the way for large-scale application. Applying LPJmL-CSR for different climate change and functional diversity scenarios may generate a range of future grassland productivities.