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1. There is growing concern that the current loss of biodiversity may negatively affect ecosystem functioning and stability. Although it has been shown that species loss may reduce biomass production and increase temporal variability, experimental evidence that species loss affects ecosystem resistance and resilience after perturbation is limited.2. Here, we use the response of experimental plant communities - which differ in diversity - to a natural drought to disentangle the effects of diversity and biomass on resistance, recovery and resilience.3. Resistance to drought decreased with diversity, but this pattern was highly dependent upon pre-drought biomass. When corrected for biomass, no relationship between diversity and resistance was observed: at each level of diversity, biomass production was reduced by approximately 30%.4. In contrast, recovery (change in biomass production after drought) increased with diversity and was independent of biomass. Resilience (measured as the ratio of post- to pre-drought biomass) was similar at each level of diversity.5. Synthesis. On the one hand, our results confirm earlier findings that a positive relationship between diversity and resistance is mainly driven by pre-perturbation performance rather than by diversity. However, the results also show that recovery after drought strongly increased with diversity, independent of performance. We conclude that it is this diversity-dependent recovery which allowed diverse, productive communities to reach the same level of resilience as less diverse (and productive) communities. This finding provides strong experimental evidence for the insurance hypothesis.