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We outline the results of recent work aimed at determining the impact of grazing on biodiversity of the arid and semi-arid rangelands. We examined changes in the abundance and species composition of perennial plants, ephemeral plants, invertebrates and vertebrates using gradients of decreasing grazing intensity at greater distances from artificial sources of water. We sampled eight sites across Australia in Acacia woodland and chenopod shrubland habitats. Different suites of species occur at different distances from water. Around 20% of species were only found at the sites most remote from water. We conclude that high densities of water points are disadvantaging large numbers of species through the maintenance of widespread, moderate to heavy grazing pressure. We conclude that while many species can persist under grazing, many cannot, and that conservation of biodiversity will not be satisfactorily achieved without explicitly planning to have areas that are not grazed within the matrix of grazed rangeland.