Invasion of high-altitude grasslands by unpalatable shrubs poses a serious threat to the livelihoods of mountain herders. To address the issue, a study was conducted on shrub-infested grasslands in the Himalayan rangeland of Bhutan to compare the effects of prescribed burning and vegetation cutting on the relative abundance of several key types of plants, forage dry matter production, and yak carrying capacity, and to suggest appropriate time intervals for the application of management measures. The proportions of broadleaf and grass and palatable dry matter yield were higher on sites with a northwesterly aspect. Prescribed burning led to a significant increase in the proportion of all plant categories except rhododendron. Compared with the control (no treatment) and cutting, prescribed burning resulted in significantly higher palatable dry matter yield, which increased during the first 4 years after burning and then declined in the following 2 years. The annual carrying capacity per hectare for the burned plots was 0.23 livestock units, compared to 0.05 livestock units for the control and cut plots. These results suggest that prescribed burning is an effective tool to restore high-altitude shrub-dominated grasslands. We suggest a time interval of 6 years between burnings.