Changes in climate and biodiversity are widely recognized as primary global change drivers of ecosystem structure and functioning, also affecting ecosystem services provided to human populations. Increasing plant diversity typically enhances ecosystem functioning and stability. Higher plant diversity can also mitigate climate change effects and buffer extreme weather conditions, but the underlying mechanisms remain largely unclear. Recent studies have shown that plant diversity can mitigate climate change (e.g. reduce temperature fluctuations or drought through microclimatic effects) in different compartments of the focal ecosystem, which as such may contribute to the effect of plant diversity on ecosystem properties and functioning. However, these potential plant diversity-induced microclimate effects are not sufficiently understood. Here, we explored the consequences of climate modulation through microclimate modification by plant diversity for ecosystem functioning as a potential mechanism contributing to the widely documented biodiversity-ecosystem functioning (BEF) relationships, using a combination of theoretical and simulation approaches. We focused on a diverse set of response variables at various levels of integration ranging from ecosystem-level carbon exchange to soil enzyme activity, including population dynamics and activity of specific organisms. Here, we demonstrated that a vegetation layer composed of many plant species has the potential to influence ecosystem functioning and stability through the modification of microclimatic conditions, thus mitigating the negative impacts of climate extremes on ecosystem functioning. Integrating microclimatic processes (e.g. temperature, humidity, and light modulation) as a mechanism contributing to the BEF relationships is a promising avenue to improve our understanding of the effects of climate change on ecosystem functioning and to better predict future ecosystem structure, functioning, and services. In addition, microclimate management and monitoring should be seen as a potential tool by practitioners to adapt ecosystems to climate change.