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1. Grazing by domestic livestock is one of the most widespread land uses world-wide, particularly in rangelands, where it co-occurs with grazing by wild herbivores. Grazing effects on plant diversity are likely to depend on intensity of grazing, herbivore type, co-evolution with plants and prevailing environmental conditions.

2. We collected data on climate, plant productivity, soil properties, grazing intensity and herbivore type, and we measured their effects on plant species richness from 451 sites across 0.4 M km(2) of semi-arid rangelands in eastern Australia. We used structural equation modelling to examine the direct and indirect effects of increasing grazing intensity by different herbivores (cattle, sheep, kangaroos, rabbits) on native and exotic plant species richness across all sites, and in subsets focusing on three woodland communities spanning a gradient in productivity.

3. Direct effects of grazing by all herbivores were strongest under low productivity but waned with increasing productivity. Increases in the intensity of recent and historic livestock grazing corresponded with greater exotic plant richness under low productivity and less native plant richness under both low and moderate productivity. Rabbit effects were greatest under moderate productivity. Overall, the effects of kangaroos were benign. Grazing indirectly affected native and exotic plant richness by increasing soil phosphorus and reducing soil health (i.e. nutrient cycling).

4. Synthesis and applications. Our study shows that livestock grazing increases exotic species richness but reduces native richness, while kangaroo grazing increases native richness in environments with low productivity. The results provide clear messages for land managers and policy makers: (1) the coexistence of livestock grazing and plant diversity is only possible within more productive environments and (2) grazing under low or moderate productivity will impact upon native and exotic plant richness.