Summary The continuing nitrogen (N) deposition observed worldwide alters ecosystem nutrient cycling and ecosystem functioning. Litter decomposition is a key process contributing to these changes, but the numerous mechanisms for altered decomposition remain poorly identified. We assessed these different mechanisms with a decomposition experiment using litter from four abundant species (Achnatherum sibiricum, Agropyron cristatum, Leymus chinensis and Stipa grandis) and litter mixtures representing treatment‐specific community composition in a semi‐arid grassland under long‐term simulation of six different rates of N deposition. Decomposition increased consistently with increasing rates of N addition in all litter types. Higher soil manganese (Mn) availability, which apparently was a consequence of N addition‐induced lower soil pH, was the most important factor for faster decomposition. Soil C : N ratios were lower with N addition that subsequently led to markedly higher bacterial to fungal ratios, which also stimulated litter decomposition. Several factors contributed jointly to higher rates of litter decomposition in response to N deposition. Shifts in plant species composition and litter quality played a minor role compared to N‐driven reductions in soil pH and C : N, which increased soil Mn availability and altered microbial community structure. The soil‐driven effect on decomposition reported here may have long‐lasting impacts on nutrient cycling, soil organic matter dynamics and ecosystem functioning.