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Abstract Grasslands in China cover nearly 4 million km 2 , more than 40% of its total land area. Grasslands play an important role in livestock farming and environmental conservation. In spite of numerous efforts that have been undertaken to arrest land desertification in China, grassland degradation is advancing over wide areas through overgrazing, cropland misuse and unregulated collection of fuel and medical plants. This review presents specific examination of the present situation of grassland desertification in China, and discusses mechanisms of grassland degradation. Assessments of desertification since the 1980s are introduced, and its expanse and extent are discussed. Many scientists admit that both are causes, but two contradicting arguments surround the main cause of desertification, with one citing natural origins such as climate change, and the other pointing to anthropogenic factors such as overgrazing. Trials for clarifying mechanisms of grassland degradation are attempted from the perspective of water and energy dynamics. In addition, causes and measures of moving sand dunes and sandstorms are also discussed. For elucidation of the mechanisms of grassland degradation, the grassland ecosystem functions must be considered. Among the proposals, a mathematical approach and measurement of spectral reflectance are some new methods that are effective for assessing those functions. Measurements of soil respiration under altered grazing intensities are also useful to examine prospects in the event of global climate change. Several technologies for grassland diagnosis have been developed to arrest grassland deterioration. Indicator plant species have been determined according to grassland types. Relations of grazing pressure and species distribution have been quantified. Several measures for restoration of degraded grasslands are proposed as the next step of development in this field, including agro‐ecological measures. A promising tool for grassland monitoring is the use of remote sensing in conjunction with geographic information systems. Accurate and real‐time monitoring and management of grasslands have become increasingly feasible through sensor improvement in satellite and geographic information systems generalization in recent years.