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Summary 1. To explore how rangeland grazing affects native plant diversity at local and regional scales, we measured the frequency of occurrence of plant species along six transects spread across a large region of arid calcareous rangelands in north-western South Australia. Four transects were in commercial sheep-grazed paddocks and two were in otherwise similar lands that had never been developed for pastoralism. Each transect comprised four sites of area 0·5 km2 , at distances of 1, 4, 7 and 10 km from the nearest stock watering point in a paddock, or from a nominal starting point > 10 km from water in the undeveloped lands. 2. Nearly 200 plant species were recorded, but distributions were patchy, with > 30% of species present at < 10% of sites. 3. The apparent influence of pastoral development and proximity to water varied with the scale of inquiry. At the regional level, pastoral development had a predominantly negative effect on the abundance of species: 16 species were less abundant in paddocks than in lands that had never been developed, and only one species was more abundant. Localized trends within paddocks were more positive: significantly more species showed trends of increasing abundance with increasing proximity to watering points and associated grazing activity. 4. The study results are consistent with a general pattern whereby pastoral development enhances richness of plant species at a local scale (by providing opportunities for more species to establish) but has the potential to decrease it at a regional scale (by removing the most grazing-sensitive species from the regional species pool). 5. The results suggest there may be two fundamentally different mechanisms whereby species decline in abundance under grazing. Palatable, drought-hardy, perennial species are more likely to decline in abundance with proximity to water and associated accumulated grazing pressure in paddocks. Uncommon or short-lived species that are selectively... [ABSTRACT FROM AUTHOR]