Global change is predicted to cause shifts in species distributions and biodiversity in arctic tundra. We applied factorial warming and nutrient manipulation to a nutrient and species poor alpine/arctic heath community for seven years. Vascular plant abundance in control plots increased by 31%. There were also notable changes in cover in the nutrient and combined nutrient and warming treatments, with deciduous and evergreen shrubs declining, grasses overgrowing these plots. Sedge abundance initially increased significantly with nutrient amendment and then declined, going below initial values in the combined nutrient and warming treatment. Nutrient addition resulted in a change in dominance hierarchy from deciduous shrubs to grasses. We found significant declines in vascular plant diversity and evenness in the warming treatment and a decline in diversity in the combined warming and nutrient addition treatment, while nutrient addition caused a decline in species richness. The results give some experimental support that species poor plant communities with low diversity may be more vulnerable to loss of species diversity than communities with higher initial diversity. The projected increase in nutrient deposition and warming may therefore have negative impacts on ecosystem processes, functioning and services due to loss of species diversity in an already impoverished environment.