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Grassland is the largest area of territorial ecosystems in China, and accounts for more than 30% of the total national land area. Primarily located in the north part and as the homeland of most ethnic minorities, the grassland region is critical for ecological safety and the national security of the country. Furthermore, grassland provides nearly one-third of the country total red meat and dairy products, respectively, and is important for national healthy food supply. Yet, it is believed that a large proportion of China’s grasslands has been degraded or desertified at various degrees because of overgrazing, increased population, mining, farming activities, and climate change. To achieve grassland sustainable development, new concepts and technological advancement are required to tackle the degradation challenges and to balance the relationships between “ecological civilization, sustainable production and better living standard”. For this purpose, we proposed the concept of “Grass-based Livestock Husbandry” (abbreviated as GLiH concept), which defines ecologically-sound management of grass-fed livestock and includes three production systems: forage cultivation, forage processing, and livestock management and processing. This paper documents contents and significance of the GLiH concept, and discusses key scientific and technical issues in the development of grass-based livestock husbandry and their possible solutions. The key of the concept is the coupling and coherent development of an inter-dependent “grass-livestock relationship”. In the GLiH concept, “grasses” (including various perennial and annual grass and shrub species) are considered as the foundation of “livestock” and provides an explanation for the long-standing frustration in China’s livestock farming industry, in which for years forage production has been totally neglected. GLiH also emphasizes the dual (productional and ecological) function of the grassland and proposes to manage the grassland regions according to the “small vs. big” theory, i.e., to allocate a small area of resources-rich land for cultivation of forage crops with high biomass and high quality to protect the vast but fragile grasslands away from over-grazing and over-exploitation, as such to secure the demand of the animal feed supplies as well as to allow the grassland to make its ecological functioning. We also propose eight principles for the development of grass-based livestock husbandry, including grass breeding, artificial grassland farming, conservation and better use of natural grassland, rational allocation between grass production and ecological functioning, efficient harvesting and processing, efficient feeding of livestock, efficient use of natural resources, and systems development. To verify the GLiH concept, a large scale pilot project of “Development of Experimental Zone for Sustainable Management of Grass-based Livestock Systems” has been implemented, in collaboration with Hulun Buir State Farm Conglomerate, and the project has achieved a big success ecologically and economically.