1. The mechanisms responsible for the success or failure of agricultural diversification are often unknown. Most studies of arthropod pest management focus on enhancing the effectiveness of natural enemies, but non-crop plants can also improve or hamper pest suppression by changing the host quality of crop plants by reducing or adding available soil nutrients or water. Native perennial ground covers may provide resources and long-term habitat to resident natural enemies and be more compatible than exotic annuals for crop management in terms of competition for soil nutrients or water. 2. A three-year study was conducted in a California vineyard to examine the impacts of native perennial grasses on pests, natural enemies, crop plant condition and soil properties. Three ground cover treatments were included: bare soil with a grower standard drip irrigation, native grasses with the drip irrigation, or native grasses with the drip irrigation and an additional flood irrigation to keep the grasses green and growing during the season. 3. Numbers of leafhopper pests (Erythroneura spp.) decreased in both native grass treatments, where parasitism rates and spider densities were higher. 4. Nitrate levels in vine leaf petioles were lower in grass treatments, indicating competition with vines for soil nitrogen, which is most often considered to be detrimental. Berry weight was higher in the irrigated treatment but did not differ between the bare soil and non-irrigated native grass treatments. Grape quality (brix) was similar in the bare soil and native grass treatments, suggesting that increased soil moisture in the presence of native grasses did not compromise grape quality. In fact, leaf water stress was lower and available soil moisture higher not only in the irrigated native grass treatment but, at times, in the non-irrigated native grass treatment, in comparison to the no ground cover treatment. 5. We conclude that native grasses contributed to a reduction in leafhopper density by reducing host quality through competition with vines for soil nitrogen and providing food resources and/or habitat for natural enemies. Native grasses also improved soil water content and may be part of a water conservation program for perennial crops in dry climate regions.