It is well established that dominant plants shape belowground communities, which in turn influence ecosystem functioning. Similarly, herbivores affect belowground communities through physical disturbance and redistribution of organic inputs, but also through their interactions with the plants themselves. However, we know little about how grazing moderates effects of dominant plants on belowground organisms. We established a three-year removal experiment in a grazed and an ungrazed alpine meadow on the Qinghai-Tibet plateau to explore how grazing mediates the effects of the dominant shrub, Dosiphora fruticosa, on nematode communities. We applied structural equation modelling to assess how grazing moderates the effects of D. fruticosa on nematode communities both directly and indirectly via changes in soil physicochemical properties, root biomass and microbial communities. We found that 1) grazing changed the direction of the direct effect of shrub on nematode communities as indicated by the shift from a negative to a positive path coefficient; 2) shrub affected nematode richness mainly through microbial richness. Accordingly, nematode community composition was more closely related to microbial community composition in the ungrazed alpine meadow, while edaphic properties were stronger predictors of nematode community composition responses to shrubs in the grazed meadow; and 3) grazing suppressed the indirect effects of shrub on nematode communities via microbial communities. Our study shows that grazing plays an important role in regulating dominant plant’s effects on belowground community composition and interactions in alpine meadows.