In arid and semi-arid areas, the interactions and relationships between grassland ecosystem and soil water are important for revealing the role of grasslands in regulating water balance and for predicting future grasslands in line with climate change and other important scientific issues. We reviewed the effects of grasslands on soil moisture, as well as the responses and adaptation mechanisms of grasslands to soil moisture, from different interfaces and on different scales. Further, we analyzed the modeling methods used to simulate the relationships between grasslands and soil moisture. The effects of climate change on the relationships between grasslands and soil moisture were also summarized, since this is currently a topic of high interest. The grasslands affect soil moisture by influencing both hydrological and ecological processes. Various vegetation factors influenced soil moisture on different spatial scales and different interfaces. Soil moisture directly affects individual plant morphology characteristics, especially the leaf, stomata, and roots, leading to changes in plant physiological and ecological processes such as photosynthesis, transpiration, and soil water absorption. Furthermore, soil moisture also changes the interspecific relationships between grass species, as well as the grassland community composition and structure, which ultimately affects the functions of the grassland ecosystem. The complexity of plant water transport in the soil-plant-atmosphere continuum (SPAC) system increases the difficulty of modeling research. A full understanding of the mechanisms involved in the interaction between vegetation and soil water is key to solving the problem. Revealing the responses of relationships between plants and soil water to climate change is conducive for the accurate prediction of the impact of climate change on grassland ecosystems in arid and semiarid regions. Based on the analysis of the present research, studies on the interactions between grasslands and soil water have mainly focused on the analysis of a one-way effect, and there are deficiencies in the coupling effects and feedback between grasslands and soil water. Finally, the following further studies are proposed: 1) investigating the relationship between soil water and the dominant species and plant functional types of the grasslands, especially the mechanisms of the interactions, the threshold response, and adaptation mechanisms of different species, and the plant traits indicators that can reflect the plant responses to soil moisture; 2) investigating the conversion and comparison of different temporal and spatial scales, and the study of grassland-soil water relationships on community, landscape, ecosystem, regional, and global scales; 3) investigating plant models on individual, community, and ecosystem scales, and their coupling with water transfer models among soil-vegetation-atmosphere systems for good prediction of future changes and plant distributions of grassland, and better modeling of soil moisture; and 4) investigating the effects of climate change on the relationships and feedback between grassland and soil water, especially the plant physiological and ecology characteristics related to soil moisture.