Using a simplified nonlinearly theoretical grassland ecosystem proposed by Zeng et al., we study the sensitivity and nonlinear instability of the grassland ecosystem to finite amplitude initial perturbations with the approach of conditional nonlinear optimal perturbation (CNOP). The results show that the linearly stable grassland (desert or latent desert) states can turn to be nonlinearly unstable with finite amplitude initial perturbations. When the precipitation is between the two bifurcation points, a large enough finite amplitude initial perturbation can induce a transition between the grassland state the desert state or the latent desert.