Climate and land-use change are some of the most profound threats to the biodiversity and functioning of the Earth’s ecosystems, yet potential synergistic effects remain unclear. Here we examined how aridity and land-use (overgrazing and haying) affect aboveground biomass and soil organic carbon (SOC) through changes in plant species richness across 716 grassland sites in northern China. We found that aridity and grazing reduced aboveground biomass and SOC through decreasing plant species richness. Notably, we observed strong negative synergistic effects of aridity and grazing, suggesting that soil carbon storage was particularly threatened by grazing in arid environments. By contrast, haying reduced aboveground biomass and had no significant effect on SOC, although it increased plant species richness. Together, the results demonstrate that climate change and overgrazing mainly threaten soil carbon storage via their detrimental effects on plant diversity, and the detrimental overgrazing effects are particularly strong under arid conditions.