Many mountain pastures consist of a mosaic of grassland and shrub communities. Ongoing changes in mountain agriculture have affected the balance between the two elements of the mosaic. In order to understand the consequences of these changes for ecosystem functioning, we studied patterns in vegetation, root structure and soil properties along transects of varying grassland-to-shrub proportions. Our hypothesis was that differences in the vegetation aboveground are accompanied by differences belowground, related to soil properties and depth. The research was conducted at a subalpine site in the Trentino region (South-eastern Alps), consisting of Nardus stricta grasslands alternating with shrub patches of Rhododendron ferrugineum. Our investigation showed that the composition of vegetation was mainly governed by R. ferrugineum cover and less by soil properties. Plant species richness peaked at low to intermediate degrees of shrub cover and composition between transects became more similar with increasing shrub cover. Where R. ferrugineum cover was higher, Hemicryptophytes caespitosae were replaced by Nano-phanerophytes with consequences for belowground structures. At increasing shrub cover, root length density decreased, especially in the top soil, while root weight density remained stable and C content increased insignificantly. We discuss that theses structural changes along the gradient of R. ferrugineum cover affect a number of ecosystem services. The presented evidence suggests that maintaining grasslands with a low cover of R. ferrugineum balances a number of services, namely plant species diversity, carbon stabilization in soil and the prevention of soil erosion.