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For over 250 years, California's grasslands have been dominated by naturalized annual grasses. This vegetation state supports high biodiversity and provides most of California's forage. A newer vegetation state is dominated by recent invasive plants, which greatly decrease livestock production and biodiversity. Both of these vegetation states are dominated by annual plants, making them very susceptible to transitions in response to environmental conditions and management. Restoration of a third vegetation state, native perennial grasses, potentially provides resilience to environmental variations. Our research investigated how environment (precipitation, soil nitrogen) and management (native restoration, clipping) impact transitions between vegetation states. Nitrogen additions, clipping, and high rainfall (especially late-season rainfall) result in conversion from the naturalized to invaded state. Drought conditions enhance native perennial grasses, and once these natives establish, they are very effective in suppressing the invasives. Vegetation states differ in their impacts on multiple ecosystem services. Compared with the naturalized state, the invasive state greatly decreases forage availability, but has little effect on other services. Tradeoffs exist between the services provided by the native perennial vs. both annual states. Native perennial grasses suppress invasion and enhance soil nitrogen availability. However, natives also enhance nitrogen leaching and soil compaction, while decreasing erosion control and soil water storage capacity. The effects of vegetation states on ecosystem services vary with management practices, environmental conditions, and season. For example, water infiltration rates tend to be higher in the naturalized state, compared to the invaded state. However, this trend reverses under fall clipping. Management practices and environmental variability interact to influence vegetation composition and the effects of vegetation on multiple ecosystem services. Understanding these interactions is a first critical step in developing effective management for vegetation and ecosystem services, particularly in an annual-dominated system exposed to high variability in precipitation.