This study examined whether insects can alter relationships between plant species diversity and ecosystem function in grassland communities, by (i) altering biomass across a plant diversity gradient, (ii) altering relative abundances of plant species, or (iii) altering ecosystem function directly. We measured herbivore damage on seminatural grassland plots planted with 1, 2, 4, 8, or 12 plant species, and compared plant biomass in a subset of these plots with replicates in which insect levels were reduced. Plant biomass and herbivore damage increased with species richness. Reducing insect populations resulted in greater evenness of relative plant species abundances and revealed a strong positive relationship between plant species richness and above-ground biomass. Reducing insects also changed the relationship between plant species richness and decomposition. Plant species mixtures and their relative abundances partially explained plant biomass results, but not decomposition results. These results suggest that insects can alter relationships between plant diversity and ecosystem processes through all three mechanisms.