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Although common disturbances of grazing lands like plant defoliation are expected to affect their sensitivity to increasing atmospheric CO2 concentration, almost no research has been conducted to evaluate how important such effects might be on the direct responses of rangelands to CO2. This growth chamber experiment subjected intact plant–soil cylinders from a Wyoming, USA, prairie to a 3‐way factorial of CO2 (370 vs. 720 μL L−1), defoliation (non‐clipped vs. clipped) and soil nitrogen (control vs. 10 g m−2 added N) under simulated natural climatic conditions. Above‐ and below‐ground biomass and N dynamics of the functional groups C3 grasses, C4 grasses and forbs were investigated. CO2 and defoliation had independent influences on biomass and N parameters of these rangeland plants. Growth under CO2‐enriched conditions enhanced above‐ground biomass 50% in C3 grasses alone, while shoot N concentration declined 16% in both C3 and C4 grasses. Plant‐soil 15N uptake was unaffected by CO2 treatment. In contrast, defoliation had no effect on biomass, but increased tissue N concentration 29% across all functional groups. Without additional N, forage quality, which is in direct relation to N concentration, will decline under increasing atmospheric CO2. Increased dominance of C3 grasses plus reduced forage quality may necessitate changes in grazing management practices in mixed‐species rangelands.