AbstractRestoring native grassland vegetation can substantially improve ecosystem service outcomes from agricultural watersheds, but profitable pathways are needed to incentivize conversion from conventional crops. Given growing demand for renewable energy, using grassy biomass to produce biofuels provides a potential solution. We assessed the techno‐economic feasibility and life cycle outcomes of a “grass‐to‐gas” pathway that includes harvesting grassy (lignocellulosic) biomass for renewable natural gas (RNG) production through anaerobic digestion (AD), expanding on previous research that quantified ecosystem service and landowner financial outcomes of simulated grassland restoration in the Grand River Basin of Iowa and Missouri, United States. We found that the amount of RNG produced through AD of grassy biomass ranged 0.12–45.04 million gigajoules (GJ), and the net present value (NPV) of the RNG ranged −$97 to $422 million, depending on the combination of land use, productivity, and environmental credit scenarios. Positive NPVs are achieved with environmental credits for replacement of synthetic agricultural inputs with digestate and clean fuel production (e.g., USEPA D3 Renewable Identification Number, California Low Carbon Fuel Standard). Producing RNG from grassy biomass emits 15.1 g CO2‐eq/MJ, which compares favorably to the fossil natural gas value of 61.1 g CO2‐eq/MJ and exceeds the US Environmental Protection Agency's requirement for cellulosic biofuel. Overall, this study demonstrates opportunities and limitations to using grassy biomass from restored grasslands for sustainable RNG production.