Bofedales are high-Andean peatland plant communities with high capacity for water retention, which are regarded as oases of biodiversity. These areas have great social and economic value for livestock grazing, which plays an important role in their vegetation dynamics. However, the effects of increased livestock pressure on vegetation composition and surface water have not yet been clarified. The goal of this study was to assess the impact of current grazing practices on bofedal vegetation, species diversity and function. Specifically, the study aimed to (1) quantify carrying capacity and stocking rate in grazed bofedales and (2) quantify the effects of grazing pressure on plant composition and the extents of bare soil and surface water. Biomass and stocking rate estimates for 25 bofedales along the Cordillera Real (Tropical Andes, Bolivia) showed that all bofedales were overgrazed (carrying capacity/stocking rate (CC/SR) < 1). Regression analyses showed significant decreases in number of plant species, species dominance, diversity and percent surface water as CC/SR declined (p < 0.05). Bofedales are negatively affected by increased grazing pressure and potentially affected by changes in livestock species. These pressures, combined with land use changes and climate change, could result in long-term negative effects for the ecological functioning and sustainability of bofedales.