Collective action remains a fundamental approach to governing common pool resources, and Ostrom’s design principles (DPs) have been widely used for analyzing such governance. However, grasslands, as typical common pool resources, have received limited attention within this framework in China. Based on the village-level survey data in Yushu, Qinghai, we utilized DPs as fuzzy sets to discern nuances among cases and identify necessary and sufficient conditions for successful collective governance using the fsQCA method. Our findings are as follows: (i) Diverse combinations of institutional rules can lead to favorable collective governance outcomes. Achieving good outcomes requires a comprehensive approach that encompasses rules, rule enforcement, and rule-making arenas. (ii) Congruence with local conditions (DP2) emerges as a pivotal and foundational condition in collective grassland governance. Therefore, it is crucial to formulate strategic governance rules that adapt to local realities and capitalize on regional advantages to ensure long-term success. (iii) The establishment of ecological husbandry cooperatives is in line with local realities and can help achieve high grassland governance performance. The improvement in ecological, economic, and social benefits brought about by cooperatives constitutes a crucial factor for promoting herders’ active involvement in the collective management of grasslands.