Climate change forecasts of more frequent climate extremes suggest that such events will become increasingly important drivers of future ecosystem dynamics and function. Because the rarity and unpredictability of naturally occurring climate extremes limits assessment of their ecological impacts, we experimentally imposed extreme drought and a mid-summer heat wave over two years in a central U.S. grassland. While the ecosystem was resistant to heat waves, it was not resistant to extreme drought, which reduced aboveground net primary productivity (ANPP) below the lowest level measured in this grassland in almost 30 years. This extreme reduction in ecosystem function was a consequence of reduced productivity of both C4 grasses and C3 forbs. However, the dominant forb was negatively impacted by the drought more than the dominant grass, and this led to a reordering of species abundances within the plant community. Although this change in community composition persisted post-drought, ANPP recovered completely the year after drought due to rapid demographic responses by the dominant grass, compensating for loss of the dominant forb. Overall, these results show that an extreme reduction in ecosystem function attributable to climate extremes (e.g., low resistance) does not preclude rapid ecosystem recovery. Given that dominance by a few species is characteristic of most ecosystems, knowledge of the traits of these species and their responses to climate extremes will be key for predicting future ecosystem dynamics and function.