Livestock grazing is recognized as one of the main causes of vegetation and soil degradation and desertification in the arid and semiarid parts of northern China. The effects of grazing on soil enzyme activities, soil properties, and plant characteristics in a typical degraded area of desert steppe in the Alxa region were studied. We set sampling transects for vegetation property evaluation and soil sampling, and compared soil enzyme activities, soil properties, and plant characteristics under continuous year-long livestock grazing (FG), grazing excluded for six years (2002EX), and grazing excluded for 10 years (1998EX). Soil enzyme activities increased significantly with the duration of livestock exclusion. Compared with FG, activities in 1998EX of urease (URE), alkaline phosphatase (AKP), catalase (CAT), and saccharase (SAC) were 214%, 121%, 17%, and 76% higher, respectively. Exclusions also enhanced organic carbon (SOC), total nitrogen (TN) and phosphorus (TP), and inorganic nitrogen (IN) and phosphorus (IP) accumulation, but reduced soil pH and bulk density. Microbial biomass carbon (MBC) and nitrogen (MBN) were ranked 1998EX > 2002EX > FG. Soil enzyme activities were significantly positively correlated with SOC (p<0.01), MBC, and MBN (p<0.01), but negatively correlated with soil bulk density. While continuous overgrazing in the erosion-prone desert steppe is detrimental to soil and vegetation, this can be reversed and significant increases in soil fertility, cover, and biomass can be achieved by grazing exclusion. Our results also indicate that soil microbial biomass and enzyme activities are sensitive to exclusion, and thus may be important indicators of the soil changes associated with management history.