Atmospheric nitrogen (N) deposition is altering grassland productivity and community structure worldwide. Deposited N comes in different forms, which can have different consequences for productivity due to differences in their fertilization and acidification effects. We hypothesize that these effects may be mediated by changes in plant functional traits. We investigated the responses of aboveground primary productivity and community functional composition to addition of three nitrogen compounds (NH₄NO₃, [NH₄]₂SO₄, and CO[NH₂]₂) at the rates of 0, 5, 10, 20 g N m^-2 yr^-1. We used structural equation modeling (SEM) to evaluate how functional structure influences the responses of productivity to the three N compounds. Nitrogen addition increased community-level leaf chlorophyll content but decreased leaf dry matter content and phosphorus concentration. These changes were mainly due to intra-specific variation. Functional dispersion of traits was reduced by N addition through changes in species composition. SEM revealed that fertilization effects were more important than soil acidification for the responses of productivity to CO(NH₂)₂ addition, which enhanced productivity by decreasing functional trait dispersion. In contrast, the effects of (NH₄)₂SO₄ and NH₄NO₃ were primarily due to soil acidification, influencing productivity via community-weighted means of functional traits. Our results suggest that N forms with different fertilizing and acidifying effects influence productivity via different functional traits pathways. Our study also emphasizes the need for in situ experiments with the relevant N compounds to accurately understand and predict the ecological effects of atmospheric N deposition on ecosystems.