1. In many grasslands, some ants act as ecological engineers to produce long-lasting soil structures which have a considerable influence on the patterns and dynamics of plant, vertebrate and invertebrate species. They promote species richness and diversity. 2. The yellow meadow ant, Lasius flavus, is the most abundant allogenic ecological engineer in grazed European grasslands, producing vegetated long-lasting mounds. It is so frequent and abundant that it must be regarded as a keystone species. Grassland restoration projects frequently attempt to reintroduce grasslands on abandoned arable fields. When this ant does not colonize naturally it should be introduced. It probably limits the abundance of grasses in a similar manner to hemi-parasitic plant species. 3. Ant-hills make a distinctive contribution to grassland heterogeneity. Measurements on mounds in a single grassland over 45 years document the dynamics of the same 200+ ant-hills in volume, surface area and basal area. As the mounds aged, they increased in size and took over a higher proportion of the grassland surface. Occupied mounds continued to grow, abandoned mounds decreased in volume and some disappeared entirely. 4. Four plant species favoured by the soil heaped by the ants were also monitored. Two woody perennials grew up through heaped soil and two short-lived species colonized its surface. As the mounds became occupied, some of these species significantly increased, and when they were abandoned some decreased. 5. In a grassland, the ant-hill population provides a fluctuating subset of plant and animal species which are characteristic of temporary habitats. This seems likely to reduce the rate of local extinctions which might otherwise result from fluctuations in grazing pressure. In conservation settings, ant-hills should be introduced or maintained where possible, and considered in planning grassland maintenance and management.