Distorted plant diversity patterns due to ungulate herbivory could be explained by changes in community assembly processes, but the effects of ungulate herbivory on plant community assembly remain unclear. Here, we examined the role of deer herbivory in the regulation of the assembly processes of a forest floor plant community by assessing species and functional diversity in over- and no-grazing plots (control and exclosure plots, respectively) in Shiretoko National Park in Japan. Compared with the exclosure plot, vegetation coverage was considerably lower, and species richness and diversity were higher in the control plot. Functional traits associated with competitive ability (leaf area and chlorophyll content) were significantly higher in the exclosure plot. The pattern of functional diversity changed from overdispersion to clustering with an increase in local crowdedness. This trait clustering indicates that the local communities that were free from ungulate disturbance gradually became dominated by some competitively superior plant species, which led to low species diversity and biotic homogenization. In contrast, the reduction in vegetation due to overgrazing by deer resulted in an increase in the relative importance of stochastic assembly processes, which enabled the coexistence of various species, including less competitive ones. Our results emphasize that although deer overabundance is of concern, their complete exclusion has a negative consequence from an ecological perspective. Because deer herbivory is an inherent process that affects the biodiversity of plants on the forest floor, the establishment of fences requires careful consideration to ensure the conservation of ecological processes and their associated biodiversity.