Climate models predict increased frequency and severity of drought events. At an Irish and Swiss site, experimental summer droughts were applied over two successive years to grassland plots sown with one, two or four grassland species with contrasting functional traits. Mean yield and plot-to-plot variance of yield were measured across harvests during drought and after a subsequent post-drought recovery period. At both sites, there was a positive relationship between species richness and yield. Under rainfed control conditions, mean yields of four-species communities were 32% (Wexford, Ireland) and 51% (Zürich, Switzerland) higher than in monocultures. This positive relationship was also evident under drought, despite significant average yield reductions (−27% at Wexford; −21% at Zürich). Four-species communities had lower plot-to-plot variance of yield compared to monoculture or two-species communities under both rainfed and drought conditions, which demonstrates higher yield stability in four-species communities. At the Swiss but not the Irish site, a high degree of species asynchrony could be identified as a mechanism underlying increased temporal stability in four-species communities. These results indicate the high potential of multi-species grasslands as an adaptation strategy against drought events and help achieve sustainable intensification under both unperturbed and perturbed environmental conditions.