Changes in precipitation regimes and nitrogen deposition levels due to global change are altering terrestrial ecosystems worldwide. Most attempts at understanding how biotic interactions affect plant species and community responses to global change have focused on biotic interactions measured at the community level. However, these approaches ignore that communities include functionally dissimilar species that might respond differently to changes in the effects of dominant neighbours along environmental gradients. We test the hypothesis that plant species with differences in functional traits may exhibit contrasting interactions with a dominant shrub species within a single community, thereby stabilizing community-level responses to the effects of global change. We manipulated water and nitrogen applications in a semi-arid dune community in northern China, quantified the biomass of herbaceous species occurring below the dominant shrub, Artemisia ordosica, and in adjacent open patches (without the shrub), and measured herbaceous species height and leaf dry matter content. The effects of A. ordosica were quantified at the species, group and community levels using the relative interaction index (RII). Redundancy analysis was performed on species traits and the RII values to assess the relationships between functional differences in species and plant–plant interactions. Species were then grouped using a cluster analysis and the RII values were recalculated at the group level. The redundancy analysis showed that species height and leaf dry matter content were significantly correlated to the changes in species' responses to the effect of A. ordosica along treatments. The four groups of species identified by the cluster analysis showed contrasting variations in competitive or facilitative responses depending on species traits and environmental treatments. However, the interactions measured at the group level balanced the community-level responses, as we found no significant changes in the effects of A. ordosica along treatments for community biomass, richness and functional diversity indices. Synthesis. Our findings indicate that species with different functional strategies within a community exhibit contrasting responses to a dominant shrub along environmental gradients. These contrasting changes in plant–plant interactions of functionally different species may balance the responses of community-level metrics. This suggests that functional differences between species groups and the balance of plant–plant interactions stabilize community responses to global change. © 2021 British Ecological SocietyRead less <