Arbuscular mycorrhizal (AM) fungal communities play a critical role in soil multifunctionality and productivity in agricultural systems. Under exogenous phosphorus (P) inputs, clarifying their contributions can not only enhance soil biological fertility but also reduce the environmental impacts of excessive fertilization. In this study, a three-year P manipulation experiment was conducted in a semi-arid L. chinensis grassland to investigate how four P levels affect AM fungal community composition and their influence on soil multifunctionality and productivity. The results demonstrated that P application significantly enhanced soil multifunctionality, aboveground biomass, seed yield, alpha-diversity of AM fungal communities, and the complexity of their co-occurrence networks in L. chinensis grasslands, whereas root AM fungal gene concentrations declined progressively with increasing P levels. P treatment had no significant effect on beta-diversity of AM fungal communities, with AM fungal richness and soil pH identified as key determinants of soil multifunctionality. In terms of grassland productivity, P input, soil multifunctionality, and root-associated AM fungal gene concentrations were important drivers of biomass. In addition, the optimal P fertilizer inputs were estimated at 32.79 kg P ha(-)(1) for L. chinensis biomass and 27.85 kg P ha(-)(1) for seed yield. AM fungi can indirectly enhance the productivity of grassland by regulating soil function, and the optimized P fertilizer application rate (27.24 kg P ha-(1)) can balance the ecological benefits and production demands. The results of this study provide a scientific basis for the sustainable management of artificial grassland in arid areas and the precise application of P fertilizer.