This microcosm study is concerned with understanding those factors which regulate ecosystem processes of nutrient cycling and plant productivity in a montane grassland ecosystem. We examined the effects of different groups of soil fauna, namely bacterial-feeding nematodes and Collembola, on nutrient mineralization (N and P) in an acid, organic soil taken from a montane grassland in the Peak District National Park, United Kingdom. We also examined whether faunal influences on nutrient release, a measure of nutrient mineralization, resulted in changes in nutrient uptake and biomass production of an indigenous montane grass species (Nardus stricta (L.)). We found that in the presence of Collembola, and when nematodes and Collembola were combined, N mineralization, nutrient leaching and shoot N contents of N. stricta was significantly increased relative to a defaunated control. We also found that net P mineralization and leaching increased (although not significantly) in the presence of both nematodes and Collembola, resulting in a significant increase in shoot P content of N. stricta. The presence of nematodes alone, which were largely bacterial-feeders, had no effect on the mineralization of N or P, or shoot nutrient content. We suggest that differences in the effect of faunal treatments on nutrient mineralization are related to the feeding strategies of the added fauna, and to their consequent effect on the size of the soil microbial biomass. The treatments that increased N mineralization and plant nutrient content (N and P) also significantly reduced plant growth (shoot and root). We suggest that high NH4+–N concentrations in the soil solution of Collembola treatments inhibited the growth of N. stricta and that the growth of other grassland species may benefit from this improvement in nutrient availability.