Aboveground fungal pathogens can substantially reduce biomass production in grasslands. However, we lack a mechanistic understanding of the drivers of fungal pathogen infection and impact. Using a grassland global change and biodiversity experiment we show that the trade-off between plant growth and defense is the main determinant of infection incidence. In contrast, nitrogen addition only indirectly increased incidence via shifting plant communities towards faster growing species. Plant diversity did not decrease incidence, likely because spillover of generalist pathogens or dominance of susceptible plants counteracted negative diversity effects. A fungicide treatment increased plant biomass production and high levels of infection incidence were associated with reduced biomass. However, pathogen impact was context dependent and infection incidence reduced biomass more strongly in diverse communities. Our results show that a growth-defense trade-off is the key driver of pathogen incidence, but pathogen impact is determined by several mechanisms and may depend on pathogen community composition.