The establishment of artificial grassland is crucial in restoring degraded grassland and resolving the forage–livestock conflict, and the application of organic fertilizer and complementary seeding of grass–legume mixture are effective methods to enhance grass growth in practice. However, its mechanism behind the underground is largely unclear. Here, by utilizing organic fertilizer in the alpine region of the Qinghai–Tibet Plateau, this study assessed the potential of grass–legume mixtures with and without the inoculation ofRhizobiumfor the restoration of degraded grassland. The results demonstrated that the application of organic fertilizer can increase the forage yield and soil nutrient contents of degraded grassland, and they were 0.59 times and 0.28 times higher than that of the control check (CK), respectively. The community composition and structure of soil bacteria and fungi were also changed by applying organic fertilizer. Based on this, the grass–legume mixture inoculated withRhizobiumcan further increase the contribution of organic fertilizer to soil nutrients and thus enhance the restoration effects for degraded artificial grassland. Moreover, the application of organic fertilizer significantly increased the colonization of gramineous plant by native mycorrhizal fungi, which was ~1.5–2.0 times higher than CK. This study offers a basis for the application of organic fertilizer and grass–legume mixture in the ecological restoration of degraded grassland.