Pronounced warming occurring on the Tibetan Plateau is expected to stimulate alpine grassland growth but could also increase atmospheric aridity that limits photosynthesis. But there lacks a systematic assessment of the impact of atmospheric aridity on alpine grassland productivity. Here we combine satellite observations, flux-tower-based productivity, and model simulations to quantify the effect of atmospheric aridity on grassland productivity and its temporal change between 1982 and 2011. We found a negative impact of atmospheric vapor pressure deficit on grassland productivity. This negative effect becomes increasingly intensified in terms of the impact severity and extent, suggesting an increasingly important role of atmospheric aridity on productivity. We further demonstrated that this negative effect is mitigated but cannot be overcompensated by the positive effect of rising CO2. Given that vapor pressure deficit is projected to further increase by similar to 10-38% in the future, Tibetan alpine grasslands will face an increasing stress of atmospheric drought.