Traditional models of state transition in arid lands emphasize changes in disturbance regimes and abiotic feedbacks that promote the degradation of grassland into shrubland, whereas biotic interactions like competition and facilitation are often overlooked. Here, we conducted an experiment to determine whether shrubs have a positive, neutral, or negative effect on grasses and if these interactions may play a role in grassland–shrubland state transition. Prosopis glandulosa shrub neighbors within 5 m of Bouteloua eriopoda grass patches were left intact (controls) or killed with foliar herbicide, and metrics of grass performance were evaluated over 5 years. We saw no evidence of shrub facilitation of grasses. Instead, grass ANPP responded positively to shrub removal in all years, but more so in years with above-average rainfall. Grass allocation to vegetative reproduction and grass patch size also increased when shrub neighbors were removed. These results demonstrate that biotic interference by shrubs upon grasses reinforce and magnify grazing- and drought-induced abiotic feedbacks during grassland–shrubland transitions. Shrub effects on grass should therefore be considered a key process in desert grassland state transitions.