Exploring how interactions between species evenness and dominant species identity affect litter decomposition processes is vital to understanding the relationship between biodiversity and ecosystem functioning in the context of global changes. We carried out a 127‐day litter decomposition experiment under controlled conditions, with interactions of four species evenness types (high, medium, low and single species) and three dominant species identity (Leymus chinensis, Serratula centauroides, Artemisia capillaris). After collecting the remaining litter, we estimated how evenness and dominant species identity affected litter mass loss rate, carbon (C) loss rate, nitrogen (N) loss rate and remaining litter C/N directly or indirectly, and assessed relative mixture effects (RMEs) on litter mass loss. The main results are shown as follows. (1) By generalized linear models, litter mass loss rate was significantly affected by evenness after 69‐day decomposition; N loss rate was affected by dominant species identity after 69‐day decomposition, with treatment dominated by Serratula centauroides being at least 9.26% higher than that dominated by any of other species; and remaining litter C/N was affected by the interactions between evenness and dominant species identity after 30‐, 69‐ and 127‐day decomposition. (2) Twenty‐three out of 27 RMEs were additive, and dominant species identity showed a significant effect on RMEs after 127‐day decomposition. (3) By confirmatory path analyses, litter mass loss rate was affected by dominant species identity directly after 127‐day decomposition, and by both species evenness and dominant species identity indirectly which was mediated by initial litter functional dispersion (FDis) after 30‐ and 69‐day decomposition; remaining litter C/N was affected by evenness indirectly which was mediated by initial litter FDis after 127‐day decomposition. These findings highlight the importance of evenness and dominant species identity on litter decomposition. The study provides insights into communities during retrogressive successions in semi‐arid grasslands in the context of global changes.