Perennial plants create productive and biodiverse hotspots, known as fertile islands, beneath their canopies. These hotspots largely determine the structure and functioning of drylands worldwide. Despite their ubiquity, the factors controlling fertile islands under conditions of contrasting grazing by livestock, the most prevalent land use in drylands, remain virtually unknown. Here we evaluated the relative importance of grazing pressure and herbivore type, climate and plant functional traits on 24 soil physical and chemical attributes that represent proxies of key ecosystem services related to decomposition, soil fertility, and soil and water conservation. To do this, we conducted a standardized global survey of 288 plots at 88 sites in 25 countries worldwide. We show that aridity and plant traits are the major factors associated with the magnitude of plant effects on fertile islands in grazed drylands worldwide. Grazing pressure had little influence on the capacity of plants to support fertile islands. Taller and wider shrubs and grasses supported stronger island effects. Stable and functional soils tended to be linked to species-rich sites with taller plants. Together, our findings dispel the notion that grazing pressure or herbivore type are linked to the formation or intensification of fertile islands in drylands. Rather, our study suggests that changes in aridity, and processes that alter island identity and therefore plant traits, will have marked effects on how perennial plants support and maintain the functioning of drylands in a more arid and grazed world.