AbstractPlant and microbial diversity are key to determine ecosystem functioning. Despite the well‐known role of local‐scale α diversity in affecting vegetation biomass, the effects of community heterogeneity (β diversity) of plants and soil microbes on above‐ and belowground biomass (AGB and BGB) across contrasting environments still remain unclear. Here, we conducted a dryness‐gradient transect survey over 3000 km across grasslands on the Tibetan Plateau. We found that plant β diversity was more dominant than α diversity in maintaining higher levels of AGB, while soil fungal β diversity was the key driver in enhancing BGB. However, these positive effects of plant and microbial β diversity on AGB and BGB were strongly weakened by increasing climatic dryness, mainly because higher soil available phosphorus caused by increasing dryness reduced both plant and soil fungal β diversities. Overall, these new findings highlight the critical role of above‐ and belowground β diversity in sustaining grassland biomass, raising our awareness to the ecological risks of large‐scale biotic homogenization under future climate change.