We studied the relationships among plant functional traits and multiple ecosystem services. Nine indicators of plant functional traits of plant heights and palatability were established, which were Rao index of plant heights, the community weighted mean value (CWM) of plant heights of all species, the CWM of plant heights of dominant species, the CWM of plant heights of dominant and subdominant species, the richness of palatable plants, the richness ratio of palatable species to all species, the ratio of palatable biomass to total biomass, the CWM of plant heights of palatable species, and the CWM of the ratio of heights of palatable plants to all plant species. The ecosystem services we analyzed included forage supply, soil carbon stocks, soil fertilization supply, water regulation, and soil retention. Further, we attempted to test four candidate mechanisms by which plant functional traits influence ecosystem services. These were:1) mass ratio, 2) selection, 3) niche complementarity, and 4) insurance. In 2012, we collected soil and vegetation samples from Xincang village, Lhasa, Tibet. Ecosystem services and plant functional traits were quantified based on these samplings. Pearson correlations were calculated among the nine functional traits, as well as between the functional traits and ecosystem services. The results showed that among the functional traits, the Rao index of plant heights was significant negatively correlated with soil organic carbon, soil total nitrogen, and soil water content. The ratio of the CWM of the heights of palatable plants to all plant species was significant positively correlated with soil organic carbon, soil total nitrogen, and soil water content. However, the CWM of the plant heights of all species, palatable species, dominant species, dominant and subdominant species, as well as the richness of palatable species, the ratio of the palatable specie richness to all species, and the ratio of palatable biomass to all species, were not significantly correlated with any of the ecosystem services. Our results demonstrated that the niche complementarity of the light captures of the plant community has negative impacts on ecosystem soil carbon stock, fertilization provisioning, and water regulating services. However, the relative niche competitiveness of light captures of palatable plants in the community has positive impacts on ecosystem soil carbon stock, fertilization provisioning, and water regulating services. The results imply, from the perspective of resource competitiveness, the concepts of niche complementarity and insurance best characterize the mechanisms by which plant functional traits determine ecosystem services in grassland. However, from the perspective of palatability, the concepts of mass ratio and selection are more reasonable.