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The occurrence of multi‐year drought is predicted to increase globally with climate change. However, it is unclear whether drought effects on ecosystems are progressive through time.Here, we experimentally reduced growing season precipitation (GSP) by 45% at seven North American temperate grasslands for four consecutive years to determine the following: (a) whether the effects of reduced precipitation on plant community structure and biomass components (shoot, root, litter) are compounding over time; (b) whether prior year climatic and soil conditions influence subsequent drought impacts on plant community structure and biomass components; and (c) whether the effects of reduced precipitation on individual ecosystem components are related to one another.Across the seven field sites, we observed neither consistent nor progressive effects of reduced precipitation on any biomass component during the experiment, despite having extreme drought conditions imposed for four consecutive years. Relative to the ambient treatment, above‐ground net primary productivity (ANPP) declined in response to drought during the early years of the experiment but increased above the ambient treatment in the fourth year, while root and litter biomass were stable across the sites throughout the study. Similarly, graminoid cover decreased initially but recovered by the final year of the experiment, contributing to observed differences in species composition between treatments across sites. Compositional changes were not associated with any declines in species richness or evenness. Divergent responses among years were not driven by lag effects based on prior year climatic and soil conditions. Furthermore, precipitation effects on ecosystem components were largely independent as we found only two positive links: between ANPP and plant species richness, and between species evenness and composition.Synthesis. Overall, our results suggest that these northern grasslands are relatively resistant to short‐term multi‐year drought in the context of supporting plant diversity and biomass production. [ABSTRACT FROM AUTHOR]