Grazing by large ungulates often increases plant species richness in grasslands of moderate to high productivity. In a mesic North American grassland with and without the presence of bison (Bos bison), a native ungulate grazer, three non-exclusive hypotheses for increased plant species richness in grazed grasslands were evaluated: (1) bison grazing enhances levels of resource (light and N) availability, enabling species that depend on higher resource availability to co-occur; (2) spatial heterogeneity in resource availability is enhanced by bison, enabling coexistence of a greater number of plant species; (3) increased species turnover (i.e. increased species colonization and establishment) in grazed grassland is associated with enhanced plant species richness. We measured availability and spatial heterogeneity in light, water and N, and calculated species turnover from long-term data in grazed and ungrazed sites in a North American tallgrass prairie. Both regression and path analyses were performed to evaluate the potential of the three hypothesized mechanisms to explain observed patterns of plant species richness under field conditions. Experimental grazing by bison increased plant species richness by 25% over an 8-year period. Neither heterogeneity nor absolute levels of soil water or available N were related to patterns of species richness in grazed and ungrazed sites. However, high spatial heterogeneity in light and higher rates of species turnover were both strongly related to increases in plant species richness in grazed areas. This suggests that creation of a mosaic of patches with high and low biomass (the primary determinant of light availability in mesic grasslands) and promotion of a dynamic species pool are the most important mechanisms by which grazers affect species richness in high productivity grasslands.