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China launched the “Returning Grazing Lands to Grasslands” project about a decade ago to restore severely degraded grasslands. Grassland grazing exclusion was one of the experimental approaches for achieving the grand goal. Here, we evaluate the long-term regional ecological effects of grassland grazing exclusion in the Xilingol region of Inner Mongolia, China. The dynamics of grassland communities over 8 years (2004–2011) were continuously monitored at 11 research sites dominated by temperate steppe ecosystems. These sites represent the diverse landscapes of the Mongolian Plateau in the Arid, Semi-Arid, and Humid Climatic Zones that have varying precipitation levels. The community structure of degraded grasslands was found to recover quickly toward a benign state after grazing exclusion. The exclusion promoted an increase in mean plant community height, coverage, aboveground fresh biomass, and quality. The grasslands recovered fastest and most favorably in the Humid Zone followed by the Semi-Arid Zone and the Arid Zone. The increase in the aboveground biomass and vegetation height correlated significantly with the amount of total growing season precipitation. Precipitation therefore amplified the grazing exclusion effects on grassland restoration. Grazing exclusion was most effective in the relatively moist part of the study region. However, other factors such as global climate change and variability might have interacted with grazing management practices, thereby influencing the outcomes of grassland restoration efforts in Inner Mongolia. Future implementations of grassland ecosystem management should consider the regional climatic heterogeneity to maximize costs/benefits for achieving long-term ecosystem sustainability.