Grasslands, one of the most widespread land cover types in China, are of great importance to natural environmental protection and socioeconomic development. An accurate quantitative assessment of the effects of inter-annual climate change and human activities on grassland productivity has great theoretical significance to understanding the driving mechanisms of grassland degradation. Net primary productivity (NPP) was selected as an indicator for analyzing grassland vegetation dynamics from 2001 to 2010. Potential NPP and the difference between potential NPP and actual NPP were used to represent the effects of climate and human factors, respectively, on grassland degradation. The results showed that 61.49% of grassland areas underwent degradation, whereas only 38.51% exhibited restoration. In addition, 65.75% of grassland degradation was caused by human activities whereas 19.94% was caused by inter-annual climate change. By contrast, 32.32% of grassland restoration was caused by human activities, whereas 56.56% was caused by climatic factors. Therefore, inter-annual climate change is the primary cause of grassland restoration, whereas human activities are the primary cause of grassland degradation. Grassland dynamics and the relative roles of climate and human factors in grassland degradation and restoration varied greatly across the five provinces studied. The contribution of human activities to grassland degradation was greater than that of climate change in all five provinces. Three outcomes were observed in grassland restoration: First, the contribution of climate to grassland restoration was greater than that of human activities, particularly in Qinghai, Inner Mongolia, and Xinjiang. Second, the contribution of human activities to grassland restoration was greater than that of climate in Gansu. Third, the two factors almost equally contributed to grassland restoration in Tibet. Therefore, the effectiveness of ecological restoration programs should be enhanced whenever climate change promotes grassland restoration.