Decomposition is one of the most important ecosystem processes, which plays a critical role in regulating nutrient cycling and energy flow in terrestrial ecosystems. In terrestrial ecosystems, multiple plant species coexist in a community with high plant species richness, which may lead to diverse plant litter input and complicated litter chemicals, high microhabitat heterogeneity, and highly diverse decomposers and their interactions. Mixed soil litters with diverse plant species usually have more complex mechanism underlying decomposition because of the complementary use of nutrients and transfer among different species, greatly challenging the assumptions about litter decomposition and biodiversity. We reviewed the studies on decomposition of mixed-species litter in terms of the impact of plant diversity on litter quality, decomposing microhabitats, and decomposers and their interactions. We found that the majority of recent studies revealed a non-additive effect of mixed litters on mass loss and nutrient dynamics during the duration of decomposition. The occurrence of some specific plant species might strengthen the non-additive effect because they contained some special compounds. Different litter types differ in chemical composition and physical properties, and decomposing of high-quality litter by decomposer organisms eventually leads to a high nutrient availability and allows nutrient transfer to low-quality litter. Transferred nutrients, in turn, lead to a more rapid decomposition of the low-quality litter and, consequently, of the entire litter mixture. Litter species identity was an important determinant of abundance and diversity of soil fauna, while litter mixing had weak or no significant effect on the soil fauna communities; however, it had significant effect on components of the macrofauna and nematodes and their diversity. Moreover, the effects of mixed litters on decomposers usually depend on the decomposing time. Some studies showed that litter diversity may induce significant changes in the composition, diversity, and enzyme activities of decomposers such as soil fauna and microbes, and also modify the interactions among the decomposers, which may induce further changes in litter decomposition. These results suggest significant effects of mixed litter on decomposition rate and an important role of decomposers in regulating decomposition of mixed litters, which are helpful to understand the effects of mixed litter on litter decomposition and nutrient dynamics in the plant-soil-decomposer system.