Litter decomposition is a key component of global biogeochemical cycles that affects the availability of soil nutrients for plant productivity. Significant variations in litter decomposability between plant taxa are attributed to diverse functional traits including litter quality, plant nutrient production, and nutrient resorption efficiency which should influence the ecological fitness of plants in the community. However, no reports to date have explored the relationships between litter decomposition and plant community dynamics, that is, plant succession and interspecific competition. We conducted a litter decomposition experiment that focused on 21 plant species in an alpine meadow. The litter decomposition rates of these species were compared with their initial litter quality and nutrient use efficiencies to examine whether the plant litter indicators of the community structures were altered following grazing exclusion. We found that among these 21 plant species, those with higher nutrient use efficiencies had a lower litter decomposition rate. Meanwhile, lower decomposition rates were correlated with higher plant importance values, and this correlation became stronger over time in plant communities following grazing exclusion, except for dominant species. Our results suggested that litter decomposability can be used to predict the changing trajectories of plant communities following grazing exclusion, except for dominant species.