Phosphorus (P) loss from land can impair surface water quality. Aluminum sulfate (alum)‐treated, compared with untreated, manure or slurry decreases P loss when applied to land; our hypothesis was that alum may also decrease P loss when directly applied to grassland grazed by dairy cows. A rainfall simulation showed that alum decreased mean concentrations of filterable reactive P (FRP) by 25 to 70% and total P (TP) by 20 to 40%, depending on soil P, Al, and Fe concentration and alum application rate. Using these factors, we predicted that FRP losses would be significantly less from alum‐treated grasslands than from untreated grasslands for 70 to 96 d. A 14‐mo field trial compared runoff P losses from plots that received 0, 25, and 50 kg Al ha−1 applied within a week of grazing by dairy cattle in spring. Runoff‐weighted concentrations (and loads) of FRP and TP decreased in alum‐treated plots by 47 to 52% and 25 to 34%, respectively. At US$157 to US$944 kg−1 P mitigated, cost‐effectiveness was estimated as medium to low compared with existing strategies for mitigating P loss in dairy farms but could be improved if applied to critical source areas of P loss. However, additional work, such as determining the need for repeat applications, is required before alum can be recommended to decrease P losses from grazed grassland.