Decomposition is a critical source of plant nutrients, and drives the largest flux of terrestrial C to the atmosphere. Decomposing soil organic matter typically contains litter from multiple plant species, yet we lack a mechanistic understanding of how species diversity influences decomposition processes. Here, we show that soil C and N cycling during decomposition are controlled by the composition and diversity of chemical compounds within plant litter mixtures, rather than by simple metrics of plant species diversity. We amended native soils with litter mixtures containing up to 4 alpine plant species, and we used 9 litter chemical traits to evaluate the chemical composition (i.e., the identity and quantity of compounds) and chemical diversity of the litter mixtures. The chemical composition of the litter mixtures was the strongest predictor of soil respiration, net N mineralization, and microbial biomass N. Soil respiration and net N mineralization rates were also significantly correlated with the chemical diversity of the litter mixtures. In contrast, soil C and N cycling rates were poorly correlated with plant species richness, and there was no relationship between species richness and the chemical diversity of the litter mixtures. These results indicate that the composition and diversity of chemical compounds in litter are potentially important functional traits affecting decomposition, and simple metrics like plant species richness may fail to capture variation in these traits. Litter chemical traits therefore provide a mechanistic link between organisms, species diversity, and key components of below-ground ecosystem function.