- Question Ecosystem engineer patch dynamics can drive biodiversity patterns by controlling habitat heterogeneity. We studied changes to composition and diversity of shrub patch understorey plant communities to patch stage at a small scale, and to patch dynamics at larger scales. These patch dynamics were driven by widespread mortality of the facilitating engineer shrub Noaea mucronata, following a drought period. Location Park Shaked LTER station, semi-arid northern Negev Desert, Israel. Methods We used diversity partitioning and similarity-based metrics to relate annual plant diversity to shrub state at the scale of individual patches, and to the ecosystem engineer shrub mortality rates at larger scales. We separately tested changes to species diversity within patches and to assemblage variation among patches. Results (1) At the patch scale, annual plant richness and diversity decreased following the loss of shrub canopy. (2) Community similarity among patches increased following shrub mortality, with a significant increase in the abundance of one dominant grass species and a decrease of most other species. (3) Taken together, these factors led to a plot-scale loss of diversity under high rates of shrub mortality. (4) Species richness and evenness metrics were significantly correlated with the shrub mortality gradient. (5) Overall, high mortality rates resulted in landscapes that were more homogeneous in both habitat structure and community composition. Conclusions Ecosystem engineer population dynamics and the dynamics of their patches can drive community-level processes. In our case, biodiversity patterns are strongly driven by shrub patch dynamics at all scales examined. In other ecosystems where the engineer patches are well studied and easily recognized, they can be used as indicators of ecosystem and community state.