In this study, we predicted that the different responses of functional groups in plant communities to fertilization and mowing may be the underlying mechanisms driving the reduction in plant diversity. We performed an experiment in a subalpine meadow of the Tibetan Plateau, in which we applied fertilization and mowing in an orthogonal manner. We surveyed the responses of the functional groups to the experimental treatments, and we analyzed the relationship between plant diversity and the mass ratio of the functional groups. The results showed that one of the major meadow components, grasses, increased in mass ratio with increased fertilization, but the mass ratio of sedges of the genus Kobresia decreased. In addition, the Kobresia group played a major role in maintaining plant diversity of the meadow. Furthermore, plant diversity increased disproportionately and logistically with the Kobresia mass ratio; however, at a certain point of increase, diversity will not increase. Especially, when grasses exceeded 50% in the meadow where an exponential decline in diversity was observed, demonstrating that over-fertilization damages diversity. Finally, the potential of Kobresia as an ecological indicator of changes in plant diversity is discussed.