Global change-induced extreme droughts are increasing in grasslands worldwide, and drought legacies may greatly affect the responses of grassland ecosystems to these changes. However, it remains poorly understood whether and how severe droughts have a positive legacy effect on grassland productivity. By combining a 4-year precipitation manipulation experiment with a 40-year observational study in a semiarid grassland, we showed that extreme droughts could create strong positive legacies on community productivity and that such legacies could last for multiple years. The mechanism behind this was the coupled effect of the drought-induced increase in annuals and the favorable precipitation pattern that facilitated the flourishing of annuals in subsequent years. This study provides experimental and observational evidence for positive drought legacies and reveals their underlying mechanisms. Our findings suggest that positive drought legacies should be incorporated into Earth system models to better predict the impact of extreme droughts on grassland ecosystems.