The intermediate disturbance hypothesis (IDH) predicts that species diversity is maximized at moderate disturbance levels. This model is often applied to grassy ecosystems, where disturbance can be important for maintaining vascular plant composition and diversity. However, effects of disturbance type and frequency on cover and diversity of non-vascular plants comprising biological soil crusts are poorly known, despite their potentially important role in ecosystem function. We established replicated disturbance regimes of different type (fire vs. mowing) and frequency (2, 4, 8 yearly and unburnt) in a high-quality, representative Themeda australis-Poa sieberiana derived grassland in south-eastern Australia. Effects on soil crust bryophytes and lichens (hereafter cryptogams) were measured after 12 years. Consistent with expectations under IDH, cryptogam richness and abundance declined under no disturbance, likely due to competitive exclusion by vascular plants as well as high soil turnover by soil invertebrates beneath thick grass. Disturbance type was also significant, with burning enhancing richness and abundance more than mowing. Contrary to expectations, however, cryptogam richness increased most dramatically under our most frequent and recent (2 year) burning regime, even when changes in abundance were accounted for by rarefaction analysis. Thus, from the perspective of cryptogams, 2-year burning was not an adequately severe disturbance regime to reduce diversity, highlighting the difficulty associated with expression of disturbance gradients in the application of IDH. Indeed, significant correlations with grassland structure suggest that cryptogam abundance and diversity in this relatively mesic (600 mm annual rainfall) grassland is maximised by frequent fires that reduce vegetation and litter cover, providing light, open areas and stable soil surfaces for colonisation. This contrasts with detrimental effects of 2-year burning on native perennial grasses, indicating that this proliferation of cryptogams has potentially high functional significance for situations where vegetation cover is depleted, particularly for reducing soil erosion.