Ecosystem productivity commonly increases asymptotically with plant species diversity, and determining the mechanisms responsible for this well-known pattern is essential to predict potential changes in ecosystem productivity with ongoing species loss. Previous studies attributed the asymptotic diversity-productivity pattern to plant competition and differential resource use (e.g., niche complementarity). Using an analytical model and a series of experiments, we demonstrate theoretically and empirically that host-specific soil microbes can be major determinants of the diversity-productivity relationship in grasslands. In the presence of soil microbes, plant disease decreased with increasing diversity, and productivity increased nearly 500%, primarily because of the strong effect of density-dependent disease on productivity at low diversity. Correspondingly, disease was higher in plants grown in conspecific-trained soils than heterospecific-trained soils (demonstrating host-specificity), and productivity increased and host-specific disease decreased with increasing community diversity, suggesting that disease was the primary cause of reduced productivity in species-poor treatments. In sterilized, microbe-free soils, the increase in productivity with increasing plant species number was markedly lower than the increase measured in the presence of soil microbes, suggesting that niche complementarity was a weaker determinant of the diversity-productivity relationship. Our results demonstrate that soil microbes play an integral role as determinants of the diversity-productivity relationship.