Herbivory is one of the key drivers shaping plant community dynamics. Herbivores can strongly influence plant productivity 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. However, the relative importance of these processes is poorly understood. We, therefore, established a common garden experiment to study plant responses to defoliation, dung addition, moss cover, and the soil legacy of reindeer grazing. We used an arctic tundra grazed by reindeer as our study system, and Festuca ovina, a common grazing-tolerant grass species as the model species. The soil legacy of reindeer grazing had the strongest effect on plants, and resulted in higher growth in soils originating from previously heavily-grazed sites. Defoliation also had a strong effect and reduced shoot and root growth and nutrient uptake. Plants did not fully compensate for the tissue lost due to defoliation, even when nutrient availability was high. In contrast, defoliation enhanced plant nitrogen concentrations. Dung addition increased plant production, nitrogen concentrations and nutrient uptake, although the effect was fairly small. Mosses also had a positive effect on aboveground plant production as long as the plants were not defoliated. The presence of a thick moss layer reduced plant growth following defoliation. This study demonstrates that grasses, even though they suffer from defoliation, can tolerate high densities of herbivores when all aspects of herbivores on ecosystems are taken into account. Our results further show that the positive effect of herbivores on plant growth via changes in soil properties is essential for plants to cope with a high grazing pressure. The strong effect of the soil legacy of reindeer grazing reveals that herbivores can have long-lasting effects on plant productivity and ecosystem functioning after grazing has ceased.