Based on a site experiment on a typical steppe of Inner Mongolia, the short term effects on aboveground biomass, soil water content, soil organic carbon, and soil total nitrogen of four cultivated pastures (CPs) with different compositions of herbaceous species were examined and compared to those of adjacent, natural grassland (NG) enclosed simultaneously. All CPs produced significantly higher aboveground biomass than did the NG after two years of establishment, and the mixed culture of Agropyron cristatum (A. cristatum) and Medicago sativa (M. sativa) produced the highest (312.39% higher than the NG). Without irrigation, soil water content in the 10-20 cm soil layer was also found to be significantly higher in the CPs than in the NG, especially for the mixed cultures of A. cristatum and M. sativa, A. cristatum, M. sativa and Lolium perenne (L. perenne), by 184.25% and 125.97%, respectively. The improvements in soil organic carbon and soil total nitrogen in CPs were less obvious and mixed, with different species compositions showing significant increases at different depths. The experimental results suggested that, with carefully selected species compositions and proper farming measures, CPs could have a positive effect on some of the pathways that generate ecosystem services, at least in the short term. We also analyzed the underlying institutional and socioeconomic causes of China's underdevelopment of CPs, and proposed a two-step development strategy. The first is to promote rain-fed CPs on small-hold farms, which require relatively low inputs in fertilizers and labor. The second is to promote large-scale operations, which will require significantly more inputs in land, irrigation, fertilizers, and machinery.