Question: Litter (dead leaves or stems) affects production by conserving soil moisture. However, that role is not clear for grasslands where most precipitation falls during the growing season when the demand for water is high. Our question was: Does litter affect forage production in such an environment? Location: Typical steppe, Inner Mongolia. Methods: We examined the role of plant litter in two experiments where litter was either removed or added in a protected or heavily grazed site, respectively, in autumn and in spring in a split plot design. The treatments (control, moderate and heavy litter application) were applied once in five replications but repeated at new locations in each of 3 years. This was done to examine only the direct effect of litter on annual net primary production and selected plant characteristics and not potential secondary effects. We also measured soil moisture and soil temperature. Results: Removing litter caused a reduction in the amount of grass (Leymus chinensis) that was produced, but litter addition caused an inconsistent effect among years, with moderate applications producing the most positive effects. Litter removal resulted in shorter and less dense plants of L. chinensis and Carex duriuscula, while heavy litter addition in autumn reduced plant height of both Cleistogenes squarrosa and C. duriuscula. Conclusions: Litter was effective for enhancing soil moisture status and reducing soil heat units in the typical steppe of Inner Mongolia. Therefore, litter mass may serve as an index of grassland health in such environments.