Climate change is transforming precipitation regimes world-wide. Changes in precipitation regimes are known to have powerful effects on plant productivity, but the consequences of these shifts for the dynamics of ecological communities are poorly understood. This knowledge gap hinders our ability to anticipate and mitigate the impacts of climate change on biodiversity. Precipitation may affect fauna through direct effects on physiology, behaviour or demography, through plant-mediated indirect effects, or by modifying interactions among species. In this paper, we examined the response of a semi-arid ecological community to a fivefold change in precipitation over 7 years. We examined the effects of precipitation on the dynamics of a grassland ecosystem in central California from 2007 to 2013. We conducted vegetation surveys, pitfall trapping of invertebrates, visual surveys of lizards and capture–mark–recapture surveys of rodents on 30 plots each year. We used structural equation modelling to evaluate the direct, indirect and modifying effects of precipitation on plants, ants, beetles, orthopterans, kangaroo rats, ground squirrels and lizards. We found pervasive effects of precipitation on the ecological community. Although precipitation increased plant biomass, direct effects on fauna were often stronger than plant-mediated effects. In addition, precipitation altered the sign or strength of consumer-resource and facilitative interactions among the faunal community such that negative or neutral interactions became positive or vice versa with increasing precipitation. These findings indicate that precipitation influences ecological communities in multiple ways beyond its recognized effects on primary productivity. Stochastic variation in precipitation may weaken the average strength of biotic interactions over time, thereby increasing ecosystem stability and resilience to climate change.