Summary Intraspecific plant diversity is a major component of community diversity, yet its role in shaping plant–microbial interactions and soil functioning remains poorly understood. In particular, plant genotypic diversity may modulate ecosystem responses to defoliation, a key driver of ecosystem processes in grazed systems. We subjected genotypic monocultures and mixtures of the grass Anthoxanthum odoratum to defoliation and quantified carbon fluxes, root exudation, and soil enzymatic activity. Using stable isotope labelling, we traced the movement of litter‐derived 15 N and photosynthetically derived 13 C between plants and soil. The composition of soil fungal communities was assessed using ITS metabarcoding. Both defoliation and genotypic diversity increased root exudation, which was positively correlated with soil enzymatic activities and plant uptake of litter‐derived 15 N. The relative benefit of enhanced N mineralisation under defoliation depended on plant genotypic diversity: incorporation of 15 N into leaves relative to 15 N incorporation into soil microbial biomass was significantly higher in genotypic mixtures than in monocultures. Higher plant genotypic diversity was associated with lower soil fungal diversity, while defoliation increased saprotroph abundance. Plant genotypic diversity and defoliation jointly regulate plant–microbial interactions, with genotypic diversity enhancing plant performance under defoliation by shifting the partitioning of mineralised N from soil microbial biomass to plants.