Aims Dryland biotic communities (plants and biocrusts) ar e k no w n t o m a int ain m u l t i p l e f u n c t i o n s (multifunctionality) and services (multiservices) that decline with overgrazing by domestic livestock. Here, we evaluate the role of biotic communities in controlling the responses of multiple functions and services to grazing in an arid shrubland. Methods We compared nine ecosystem functions and services associated with carbon and nitrogen cycling, and water infiltration at grazed and ungrazed sites in eastern Australia. We hypothesized that overgrazing would reduce individual functions, but that effects on multifunctionality and multiservices would be tempered by shrubs, vascular plants and biocrusts. Results Grazing reduced biocrust cover, soil phosphatase, β-glucosidase and potential mineralization, but not plant richness, soil respiration, infiltration measures nor dissolved inorganic N. In our models, grazing had the largest and most negative effects on multifunctionality and multiservices. Structural equation modelling showed that grazing reduced biocrust cover. Unlike the univariate analyses, grazing reduced plant cover and suppressed any positive effect of these biotic communities on multifunctionality and multiservices. Conclusions Our results suggest that any positive buffering by plant richness, shrubs and plant cover on multifunctions or multiservices will not offset the negative effects of grazing. Strategies to improve functionality of arid shrublands should focus on the management of total grazing pressure.