Under the influences of climate change and human activities, grassland ecosystems are being invaded by shrubs around the world, especially in temperate semi-arid regions of the Northern Hemisphere. Shrub encroachment can not only affect the properties of grassland ecosystem, but also have an important impact on regional or global climate by affecting biogeochemical and biophysical processes. Although shrub encroachment has become a serious ecological problem in the northern temperate region during the past decades, the possible effects of shrub encroachment on regional climate in northern temperate grasslands remain unclear due to a lack of in situ and long-term environmental records. Based on the satellite-derived land use data, land surface temperature (LST), evapotranspiration, leaf area index, and albedo data, this study quantified, for the first time, the biophysical effects of shrub encroachment on regional climate in semi-arid areas of temperate regions of the Northern Hemisphere. The results indicate that shrub encroachment tends to increase the average annual daytime and mean LST in most of the northern temperate semi-arid region due to increased bare soil fraction. In contrast, shrub encroachment could decrease the daytime LST in relatively humid region of southwest of North America by increasing evapotranspiration (vegetation coverage) and decreasing bare soil fraction. In the arid center region of Central Asia, grassland conversion to shrubland slightly decreases the surface temperature during both daytime and nighttime due to increased albedo caused by decreasing soil water content. Our findings imply that the biophysical effects of shrub encroachment on regional climate should be considered in climate models if they are to accurately simulate climate change in temperate regions of the Northern Hemisphere. More attention should be paid to the climate feedbacks of shrub encroachment, especially considering the distinct effects in different regions and how these climate feedbacks are likely to further impact ecosystem properties.