In grassland studies, an intermediate level of grazing often results in the highest species diversity. Although a few hypotheses have been proposed to explain this unimodal response of species diversity to grazing intensity, no convincing explanation has been provided. Here, we build a lattice model of a grassland community comprising multiple species with various levels of grazing. We analyze the relationship between grazing and plant diversity in grasslands under variable intensities of grazing pressure. The highest species diversity is observed at an intermediate grazing intensity. Grazers suppress domination by the most superior species in birth rate, resulting in the coexistence of inferior species. This unimodal grazing effect disappears with the introduction of a small amount of nongrazing natural mortality. Unimodal patterns of species diversity may be limited to the case where grazers are the principal source of natural mortality.