Abstract Plant community biodiversity can be maintained, at least partially, by shifts in species interactions between facilitation and competition for resources as environmental conditions change. These interactions also drive ecosystem functioning, including productivity, and can promote over‐yielding‐ an ecosystem service prioritized in agro‐ecosystems, such as pastures, that occurs when multiple species together are more productive than the component species alone. Importantly, species interactions that can result in over‐yielding may shift in response to rising CO₂ concentrations and changes in resource availability, and the consequences these shifts have on production is uncertain especially in the context of tropical mixed‐species grasslands. We examined the relative performance of two species pairs of tropical pasture grasses and legumes growing in monoculture and mixtures in a glasshouse experiment manipulating CO₂. We investigated how over‐yielding can arise from nitrogen (N) niche partitioning and biotic facilitation using stable isotopes to differentiate soil N from biological N fixation (BNF) within N acquisition into above‐ground biomass for these two‐species mixtures. We found that N niche partitioning in species‐level use of soil N versus BNF drove species interactions in mixtures. Importantly partitioning and overyielding were generally reduced under elevated CO₂. However, this finding was mixture‐dependent based on biomass of dominant species in mixtures and the strength of selection effects for the dominant species. This study demonstrates that rising atmospheric CO₂ may alter niche partitioning between co‐occurring species, with negative implications for the over‐yielding benefits predicted for legume‐grass mixtures in working landscapes with tropical species. Furthermore, these changes in inter‐species interactions may have consequences for grassland composition that are not yet considered in larger‐scale projections for impacts of climate change and species distributions. Read the free Plain Language Summary for this article on the Journal blog.