Grazing-induced changes in plant community structure can be altered by the biogeochemical regime of the ecosystem. However, responses of community structure (e.g., changes in biomass, canopy height, and stand density) to grazing-induced changes in foliar nutrient content—whether species-specific or species group-specific (dominant vs. subordinate)—are still poorly studied. We conducted a grazing experiment with four sheep stocking rates in the typical steppe of Inner Mongolia, China. We identified the dominant (Leymus chinensis and Stipa grandis) and subordinate species (Anemarrhena asphodeloides and Cleistogenes squarrosa) and examined grazing-induced changes in the relative abundance and foliar carbon (C), nitrogen (N), and phosphorus (P) contents of these species. We explored subsequent consequences on the mechanisms driving grazing-induced succession in grasslands using structural equation models (SEMs). Aboveground biomass and relative abundance increased for S. grandis, decreased for L. chinensis and A. asphodeloides in response to grazing, but did not change for C. squarrosa. Higher grazing intensity increased foliar N and P contents of subordinate species, whereas no changes occurred with increasing grazing intensity for dominant species. SEMs confirmed that the dominants were homeostatic in response to grazing while the subordinates were more flexible and adjusted foliar nutrient content to grazing intensity. Moreover, SEMs indicated that the relative abundance of species was mediated by foliar C content of both groups, whereas community biomass was dependent on foliar N and P content for the dominants but only foliar P content for the subordinates. Our findings highlight that grazing-induced shifts in plant dominance is species specific rather than group specific (dominant vs. subordinate) and that foliar nutrient content has a key role in mediating plant community compositions and biomass under grazing-managed succession.