Steppes have a long history of grazing, which has affected vegetation and ecosystem functioning to varying degrees depending on local environmental and climatic conditions. While the effects of grazing on plant species' diversity and composition are well documented, effects on plants' functional traits and genetic structures are far less widely studied. Similarly, the effects of climate/land-use interactions on plants’ functional traits or genetic structure have rarely been investigated. We conducted a study on the largest representative example of the Palearctic steppe biome, in Mongolia, using long-term grazing exclusion along a broad climatic gradient. We investigated the influence of grazing on the population genetics and functional traits of the prominent shrub species Artemisia frigida. A total of 187 individuals were sampled from eight locations along the Trans-Mongolian Railway and in the Hustai National Park. Comparisons were made between enclosed (ungrazed) and open (grazed) sites and analyzed using ten microsatellite loci. Grazing had a significant positive effect on genetic diversity but no effect on population genetic differentiation. Climatic and soil variables strongly influenced population genetic structure, with soil nutrient availability being positively associated with genetic diversity. Grazing significantly influenced functional traits (plant height, specific leaf area), however, no relationship was found between genetic diversity and plant functional traits. Overall, given that ungrazed A. frigida populations showed lower genetic diversity, a moderate level of grazing is likely to be beneficial for the species, which may also help stabilize ecosystem functioning in steppes more broadly.