Grasslands are one of the major ecosystem types in drylands. Encroachment of shrubs into grasslands affects the functioning of drylands by altering community structure, with impacts exacerbated under greater intensity of encroachment. Yet, we have a limited understanding of how ecosystem structure responds to the degree of shrub encroachment. Here, we describe a field-based study designed to examine changes in ecosystem structure beneath shrub patches (patch condition) and between patches (spatial distribution pattern of patches) along a gradient in encroachment in a semiarid grassland in Inner Mongolia, China. We found that greater encroachment was associated with wider and taller shrubs with more branches. As shrub encroachment intensified, the area beneath shrubs had more litter and was less exposed to grazing. The landscape was characterized by more discontinuous patches of vegetation and more bare ground as encroachment intensified. Either the patch condition or the patch spatial pattern was shaped mainly by the magnitude of shrub encroachment rather than by the structure of individual shrubs (e.g., height and canopy width). Our study highlights the idiosyncratic response of ecosystem structure (patch condition and patch spatial pattern) to intensifying encroachment, reinforcing the importance of considering the degree of shrub encroachment when managing encroached grasslands.