Recent Pan-Arctic shrub expansion has been interpreted as a response to a warmer climate. However, herbivores can also influence the abundance of shrubs in arctic ecosystems. We addressed these alternative explanations by following the changes in plant community composition during the last 10 years in permanent plots inside and outside exclosures with different mesh sizes that exclude either only reindeer or all mammalian herbivores including voles and lemmings. The exclosures were replicated at three forest and tundra sites at four different locations along a climatic gradient (oceanic to continental) in northern Fennoscandia. Since the last 10 years have been exceptionally warm, we could study how warming has influenced the vegetation in different grazing treatments. Our results show that the abundance of the dominant shrub, Betula nana, has increased during the last decade, but that the increase was more pronounced when herbivores were excluded. Reindeer have the largest effect on shrubs in tundra, while voles and lemmings have a larger effect in the forest. The positive relationship between annual mean temperature and shrub growth in the absence of herbivores and the lack of relationships in grazed controls is another indication that shrub abundance is controlled by an interaction between herbivores and climate. In addition to their effects on taller shrubs (>0.3 m), reindeer reduced the abundance of lichens, whereas microtine rodents reduced the abundance of dwarf shrubs (<0.3 m) and mosses. In contrast to short-term responses, competitive interactions between dwarf shrubs and lichens were evident in the long term. These results show that herbivores have to be considered in order to understand how a changing climate will influence tundra ecosystems.