Drought-prone grasslands provide a critical resource for the millions of people who are dependent on livestock for food security. However, this ecosystem is potentially vulnerable to climate change (e.g., precipitation) and human activity (e.g., grazing). Despite this, the influences of precipitation and grazing on ecological functions of drought-prone grasslands in the Tianshan Mountains remain relatively unexplored. Therefore, we conducted a systematic field investigation and a clipping experiment (simulating different intensities of grazing) in a drought-prone grassland on the northern slopes of the Tianshan Mountains in China to examine the influences of precipitation and grazing on aboveground biomass (AGB), soil volumetric water content (SVWC), and precipitation use efficiency (PUE) during the period of 2014–2017. We obtained the meteorological and SVWC data using an HL20 Bowen ratio system and a PR2 soil profile hydrometer, respectively. We found that AGB was clearly affected by both the amount and seasonal pattern of precipitation, and that PUE may be relatively low in years with either low or excessive precipitation. The PUE values were generally higher in the rapid growing season (April–July) than in the entire growing season (April–October). Overall, moderate grazing can promote plant growth under water stress conditions. The SVWC value was higher in the clipped plots than in the unclipped plots in the rapid growing season (April–July), but it was lower in the clipped plots than in the unclipped plots in the slow growing season (August–October). Our findings can enhance the understanding of the ecological effects of precipitation and grazing in drought-prone grasslands and provide data that will support the effective local grassland management.