Global change, especially land‐use intensification, affects human well‐being by impacting the delivery of multiple ecosystem services (multifunctionality). However, whether biodiversity loss is a major component of global change effects on multifunctionality in real‐world ecosystems, as in experimental ones, remains unclear. Therefore, we assessed biodiversity, functional composition and 14 ecosystem services on 150 agricultural grasslands differing in land‐use intensity. We also introduce five multifunctionality measures in which ecosystem services were weighted according to realistic land‐use objectives. We found that indirect land‐use effects, i.e. those mediated by biodiversity loss and by changes to functional composition, were as strong as direct effects on average. Their strength varied with land‐use objectives and regional context. Biodiversity loss explained indirect effects in a region of intermediate productivity and was most damaging when land‐use objectives favoured supporting and cultural services. In contrast, functional composition shifts, towards fast‐growing plant species, strongly increased provisioning services in more inherently unproductive grasslands.

Significance: Land-use intensification is a major threat to biodiversity. So far, however, studies on biodiversity impacts of land-use intensity (LUI) have been limited to a single or few groups of organisms and have not considered temporal variation in LUI. Therefore, we examined total ecosystem biodiversity in grasslands varying in LUI with a newly developed index called multidiversity, which integrates the species richness of 49 different organism groups ranging from bacteria to birds. Multidiversity declined strongly with increasing LUI, but changing LUI across years increased multidiversity, particularly of rarer species. We conclude that encouraging farmers to change the intensity of their land use over time could be an important strategy to maintain high biodiversity in grasslands.