Recent declines in arthropod diversity, abundance and biomass are central to the global biodiversity crisis. Yet, we lack a mechanistic understanding of the respective contributions of species richness, species identity and abundance to overall biomass change, and how the environment filters these processes. Synthesizing 11 years of data from a biodiversity experiment and from farmed grasslands in central Europe across a gradient of plant species richness and land-use intensity, we show that local arthropod biomass declines were predominantly (>90%) linked to species richness losses. Abundance declines among persisting species accounted for only 5–8% of lost biomass. The role of species identity depended on the environment and diminished over time: especially under high plant diversity and low land-use intensity, arthropod species with both below-average total biomass and above-average individual biomass (large, rare species) contributed disproportionately to species turnover—but this was only detectable in early years when the communities were still relatively abundant. We conclude that arthropod communities are currently homogenizing towards few common species of similar biomass, probably reducing their adaptability to future environmental change. Increasing the diversity and reducing the land-use intensity of grasslands may mitigate ongoing community simplification and loss of arthropod diversity and functioning.