As primary regulators of ecosystem multifunctionality, soil microorganisms are impacted by various stressors, including climate change and overgrazing. Presently, an increasing area of alpine meadows on the Qinghai Plateau is experiencing degradation. However, it is not yet clear how the multifunctionality of the meadow ecosystem, the microbial community, and their interactions respond to degradation. We examined the vegetation, soil, microbial, and enzyme activity indicators in the non-degradation and extreme degradation of alpine meadows on the Qinghai Plateau. Meanwhile, we assessed the complexity of fungal networks and the ecosystem’s multifunctionality. Results showed that compared to non-degraded meadows, the majority of the properties in the soil decreased significantly, especially in available potassium (10.7%-57.8%), microbial biomass carbon (67%-73.6%), and sucrase (53.2%-77.5%). Meanwhile, ecosystem multifunctionality decreased significantly, and the complexity of the fungal network became simpler. The linear fitting further demonstrated that the degradation of the alpine meadow reduced the complexity of the soil fungal network, leading to a significant decline in ecosystem multifunctionality (r = 0.552 – 0.759, p<0.001). In summary, the simplification of the fungal community due to degradation could impair the multifunctionality of the ecosystem. Consequently, when managing degraded alpine meadows, it will be important to focus on the network characteristics of soil microorganisms. We suggest restoring the complexity of soil microbial communities, which may be the foundation and prerequisite for restoring grassland ecosystem functions.