Atmospheric nitrogen deposition has increased in the last several decades due to anthropogenic activities and global changes. Increasing nitrogen deposition has become an important factor regulating carbon cycle in grassland ecosystems. Litter decomposition, a key process of carbon and nutrient cycling in terrestrial ecosystems, is the main source of soil carbon pool and the basis of soil fertility maintenance. Elevated nitrogen deposition could affect litter decomposition by raising soil nitrogen availability, increasing the quantity and quality of litter inputs, and altering soil microorganism and soil conditions. Litter decomposition are complex biological, physical and chemical processes, which were affected by abiotic, biological factors and their interactions. The effects of nitrogen deposition on litter decomposition and the underlying mechanisms were discussed in this paper, including the aspactes of soil nitrogen availability, litter production, litter quality, microclimate, soil microorganism and enzyme activities. The main research contents, directions, methods and existing problems of litter decomposition in grasslands were discussed. We also discussed the prospect of future directions to study the interaction and feedback between nitrogen deposition and grassland ecosystem carbon cycling process.