Question: Does long-term grazing exclusion affect plant species diversity? And does this effect vary with long-term phytomass accumulation across a regional productivity gradient?Location: Lowland grassy ecosystems across the state of Victoria, southeast Australia.Methods: Floristic surveys and phytomass sampling were conducted across a broad-scale productivity gradient in grazing exclusion plots and adjacent grazed areas. Differences in species richness, evenness and life-form evenness between grazed and ungrazed areas were analysed. The environmental drivers of long-term phytomass accumulation were assessed using multiple linear regression analysis.Results: Species richness declined in the absence of grazing only at the high productivity sites (i.e. when phytomass accumulation was >500 g m'2). Species evenness and life-form evenness also showed a negative relationship with increasing phytomass accumulation. Phytomass accumulation was positively associated with both soil nitrogen and rainfall, and negatively associated with tree cover.Conclusions: Competitive dominance is a key factor regulating plant diversity in productive grassy ecosystems, but canopy disturbance is not likely to be necessary to maintain diversity in less productive systems. The results support the predictions of models of the effects of grazing on plant diversity, such as the dynamic equilibrium model, whereby the effects of herbivory are context-dependent and vary according to gradients of rainfall, soil fertility and tree cover.