Serious climate challenges and environmental concerns have led to calls to mitigate greenhouse effects and pollution by controlling livestock production. In this study, we performed a cross-boundary quasi-natural experimental analysis of the Mongolian Plateau to examine the causal effects of livestock reduction on greenhouse gas (GHG) emissions and air pollutants. Aimed at grassland conservation by controlling overgrazing, China’s grassland ecological compensation policy (GECP) unintendedly offered the opportunity to estimate the causal effects of livestock reduction. To this end, we used official statistical data, remote sensing data, reanalysis data, and household survey data. Empirical findings based on the synthetic difference-in-differences (SDID) approach showed that with the implementation of the GECP, livestock reduction reduced atmospheric GHG and air pollutant concentrations and increased grassland quality and carbon sequestration in grasslands. We extended the basic SDID to the dynamic SDID and used it to estimate the causal effects in each policy year, which presented that the policy effects were more pronounced after several years of continuous implementation. The pathway analysis revealed that atmospheric CH4 concentrations decreased with the reduction in animal CH4 emissions and that the PM2.5 and PM10 concentrations decreased with grassland restoration. These findings provided empirical references for reforming the global food system to ensure both food security and environmental protection.