Knowledge of the connection between aquatic plant diversity and ecosystem processes is still limited. To examine how plant species diversity affects primary productivity, plant nutrient use, functional diversity of secondary producers and population/community stability, we manipulated submerged angiosperm species diversity in a field experiment lasting 15 weeks. Plant richness increased the shoot density for three of four species. Polyculture biomass production was enhanced by increasing richness, with positive complementarity and selection effects causing positive biodiversity effects. Species richness enhanced the community stability for biomass production and shoot density. Sediment ammonium availability decreased with plant diversity, suggesting improved nutrient usage with increasing plant richness. Interestingly, positive multitrophic effects of plant species richness on structural and functional diversity of macrobenthic secondary producers were recorded. The results suggest that mixed seagrass meadows play an important role for ecosystem functioning and thus contribute to the provision of goods and services in coastal areas.