Ecological studies often suggest that natural grasslands with high species diversity will grow more biomass and leach less nitrogen (N). If this diversity effect also applies to fertilised and irrigated pastures with controlled removal of herbage, it might be exploited to design pastures that can assist the dairy industry to maintain production while reducing N leaching losses. The purpose of this study was to test whether pasture mixtures with a high functional diversity in ryegrass traits will confer on the system higher water- and N-use efficiency. The hypothesis was tested using a process-based model in which pasture mixtures were created with varying levels of diversity in ryegrass traits likely to affect pasture growth. Those traits were: the winter- or summer-dominance of growth, the ability of the plant to intercept radiation at low pasture mass, and rooting depth. Pasture production, leaching and water- and N-use efficiency were simulated for management typical of a dairy pasture. We found that the performance of the diverse ryegrass–clover mixtures was more strongly associated with the performance of the individual components than with the diversity across the components. Diverse pasture mixtures may confer other benefits, e.g. pest or disease resistance and pasture persistence. The testing here was within a selection of ryegrasses, and the greater possible diversity across species may produce different effects. However, these results suggest that highly performing pastures under fertilised and irrigated grazed conditions are best constructed by selecting components that perform well individually than by deliberately introducing diversity between components.