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Climate change will affect the way biodiversity influences the stability of plant communities. Although biodiversity, associated species asynchrony, and species stability could enhance community stability, the understanding of potential nonlinear shifts in the biodiversity–stability relationship across a wide range of aridity (measured as the aridity index, the precipitation/potential evapotranspiration ratio) gradients and the underlying mechanisms remain limited. Using an 8‐year dataset from 687 sites in Mongolia, which included 5496 records of vegetation and productivity, we found that the temporal stability of plant communities decreased more rapidly in more arid areas than in less arid areas. The result suggests that future aridification across terrestrial ecosystems may adversely affect community stability. Additionally, we identified nonlinear shifts in the effects of species richness and species synchrony on temporal community stability along the aridity gradient. Species synchrony was a primary driver of community stability, which was consistently negatively affected by species richness while being positively affected by the synchrony between C3 and C4 species across the aridity gradient. These results highlight the crucial role of C4 species in stabilizing communities through differential responses to interannual climate variations between C3 and C4 species. Notably, species richness and the synchrony between C3 and C4 species independently regulated species synchrony, ultimately affecting community stability. We propose that maintaining plant communities with a high diversity of C3 and C4 species will be key to enhancing community stability across Mongolian grasslands. Moreover, species synchrony, species stability, species richness and the synchrony between C3 and C4 species across the aridity gradient consistently mediated the impacts of aridity on community stability. Hence, strategies aimed at promoting the maintenance of biological diversity and composition will help ecosystems adapt to climate change or mitigate its adverse effects on ecosystem stability. [ABSTRACT FROM AUTHOR]