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Small mammals play an important role in many ecosystems; hence, the factors that influence their community structure are of interest. Ungulate grazing is one such factor, and this study focussed on the effect of sheep (Ovis aries) grazing in a savanna ecosystem on small-mammal community structure. In a landscape-scale assessment, small-mammal community structure was compared at three different levels of grazing on a sheep farm in the Sub-Escarpment Savanna of the Eastern Cape, South Africa. In total, 97 small-mammal individuals across seven species were trapped. Of these individuals, 81.4% were trapped on the no-grazing control, whereas 15.5% and 3.1% were trapped on the medium- and high-grazing treatments, respectively. The results showed that the only significant differences in abundance, diversity, evenness, and richness of small mammals among grazing treatments were those mediated by the effect of grazing on grass height. It is proposed that the reduction in grass height associated with grazing is the primary mechanism by which sheep adversely affect small mammals in this ecosystem. This could be explained by the increased exposure of small mammals to predators after grazing of grass by sheep, and food competition between sheep and small mammals. The data also suggest that small mammals may persist in small and isolated patches of suitable habitat (long grass) within heavily grazed pastures subjected to rotational grazing. In the broader context of community ecology, this study sheds light on cryptic and dynamic interactions between two quite different grazing guilds. Experimental work of this kind may help to determine the role of introduced sheep in biodiversity loss of small mammals across the globe.