Woody plant encroachment is a major land management issue. Woody removal often aims to restore the original grassy ecosystem, but few studies have assessed the role of woody removal on ecosystem functions and biodiversity at global scales. We collected data from 140 global studies and evaluated how different woody plant removal methods affected biodiversity (plant and animal diversity) and ecosystem functions (plant production, hydrological function, soil carbon) across global rangelands. Our results indicate that the impact of removal is strongly context dependent, varying with the specific response variable, removal method, and traits of the target species. Over all treatments, woody plant removal increased grass biomass and total groundstorey diversity. Physical and chemical removal methods increased grass biomass and total groundstorey biomass (i.e., non‐woody plants, including grass biomass), but burning reduced animal diversity. The impact of different treatment methods declined with time since removal, particularly for total groundstorey biomass. Removing pyramid‐shaped woody plants increased total groundstorey biomass and hydrological function but reduced total groundstorey diversity. Environmental context (e.g., aridity and soil texture) indirectly controlled the effect of removal on biomass and biodiversity by influencing plant traits such as plant shape, allelopathic, or roots types. Our study demonstrates that a one‐size‐fits‐all approach to woody plant removal is not appropriate, and that consideration of woody plant identity, removal method, and environmental context is critical for optimizing removal outcomes. Applying this knowledge is fundamental for maintaining diverse and functional rangeland ecosystems as we move toward a drier and more variable climate.