The impacts of atmospheric nitrogen (N) deposition on structure and function of grassland ecosystems have been one of the most important issues in the field of global change biology. A marked reduction in species richness by N deposition has been widely observed across different grassland ecosystems worldwide, but the underlying mechanisms remain controversial and elusive. Therefore, systematic analysis of N deposition impacts on grasslands across the globe can provide important information that will contribute to efficient management of grasslands in China under elevated atmospheric N deposition. This review summarized the possible mechanisms by which chronic N enrichment led to a decline in plant species richness in grassland ecosystems. The main mechanisms include competition for resource, re-establishment of the community, metal toxicity due to soil-mediated acidification, direct toxicity of N, nutrient imbalance in soils and secondary stress. Several mechanisms operating at the spatial and temporal levels may collectively underpin the overall N deposition-induced decline in species richness of grassland ecosystems. Different mechanisms may account for the decline in species richness for a given grassland ecosystem depending on the duration and rates of atmospheric N deposition. Moreover, both soil and vegetation traits for grasslands in China are unique and differ markedly from those of European and American grasslands. Accordingly, we propose that future studies on species richness of grasslands under N enrichments should integrate species, functional groups and community, and link the soil processes to root-mediated acquisition of nutrients and leaf physiological processes.