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Herbivores can strongly influence plant growth directly through defoliation and the return of nutrients in the form of dung and urine but also indirectly by reducing the abundance of neighbouring plants and inducing changes in soil processes. The relative importance of these driving mechanisms of plant response to herbivory are still poorly understood. In a common garden experiment, we studied the aboveground and belowground responses of Festuca ovina, a grazing tolerant grass common in arctic secondary grassland, to defoliation, reindeer dung addition, changes in soil microclimate induced by the presence or the absence of a moss cover, and soil grazing legacy. Defoliation strongly reduced shoot and root growth and plant nutrient uptake. Plants did thus not compensate for the tissue lost due to defoliation, even at a higher nutrient availability. By contrast, defoliation enhanced plant N concentration and decreased plant C to N ratio. Soil from heavily grazed sites and dung addition increased plant production, plant N concentrations and nutrient uptake, although the effects of dung addition were only small. Mosses had a strong negative effect of root biomass and reduced plant compensatory growth after defoliation. Interestingly mosses also had facilitative effects on aboveground plant growth in absence of defoliation and on plant nutrient uptake and N concentrations. Although plants suffered severely from defoliation, they were also strongly favoured by the increased nutrient availability associated with herbivory. After two years, plants produced as much biomass when all positive and negative effects of herbivores were considered (defoliation, soil communities and nutrient availability under heavily grazing, dung addition and no moss cover) as in the ungrazed conditions (no defoliation, soil communities and nutrient availability under lightly grazing, no dung addition, a thick moss cover). This study indicates that graminoids can tolerate high densities of herbivores, although it suffer from defoliation directly, and suggests that changes in plant quality following defoliation and grazing-induced changes in soil processes are two key mechanisms through which herbivores can control plant productivity in arctic secondary grasslands. Plant tolerance to herbivory will depends on how herbivores utilise a pasture area and on the balance between the positive and the negative effects of grazing on plant growth.