Shrub encroachment is widespread in the grasslands of northern China. Shrub encroachment changes the plant community structure, plant diversity and productivity, which directly influence the grassland conservation and its sustainable utilization. This study elucidated the differences of plant community structure and aboveground biomass between shrub and grass patches with different slopes which formed after shrub encroachment on the Loess Plateau. We observed species composition, species diversity and aboveground biomass in these patches. The result showed that: (1) there are significant differences in plant community structure (P = 0.001) and aboveground biomass (P < 0.001) in shrub patches and grass patches. But there is no significant effect in different slopes (P > 0.1). (2) In shrub encroched grassland, we found 29 species, of which 27 species were found in grass patches and 18 species in shrub patches. Shrub encroachment significantly altered species composition. The dominant species Stipa bungeana was replaced by Caragana brachypoda in shrub patches. The species richness was lower than that of grass patches, but the community evenness was increased. (3) The aboveground biomass of shrub patches was higher 251.2 g·m^-2 than that of grass patches. In the shrub patches, the aboveground biomass of shrubs and semishrubs were increased by 452.1 g·m^-2, perennial grasses decreased by 176.5 g·m^-2, and other functional groups decreased by 24.4 g·m^-2. (4) The loss of species has less negative impact on the aboveground biomass. However, the newly emerging species and dominant species promoted the aboveground biomass. Although shrub encroachment have improved the aboveground biomass, its negative effect of species richness and shift in dominant species may change the maintaining mechanism of palnt diversity and community stability.