Biological diversity is declining across the tree of life, including among prokaryotes. With the increasing awareness of host-associated microbes as key regulators of eukaryotic host physiology, behavior and ecology, it is important to understand the implications of declining diversity within host microbiomes on host fitness and ecosystem function. We use phytoplankton and their associated microbiomes as a model system to test the independent and interactive effects of declining microbiome diversity with and without other stressors caused by human activity, elevated temperature and altered nutrient availability. We found widespread implications of low microbiome diversity on host physiology, phytoplankton community dynamics and nutrient cycling. Compared to our high microbiome diversity treatment, our low microbiome diversity treatment resulted in greater host cellular stress, as indicated by elevated C:N, 13C and 15N, greater phytoplankton density and diversity, and lower total dissolved N and P in the water column. These effects of low microbiome diversity were most notable in nutrient depleted environments. Our results emphasize the widespread implications of declining host-associated prokaryotic diversity, with potentially cascading implications on ecosystem functions and higher trophic levels. Such effects of declining prokaryotic diversity are likely to be amplified in ecosystems experiencing multiple stressors caused by anthropogenic activities.