AbstractRecruitment for many arid‐zone plant species is expected to be impacted by the projected increase in soil temperature and prolonged droughts associated with global climate change. As seed dormancy is considered a strategy to avoid unfavorable conditions, understanding the mechanisms underpinning vulnerability to these factors is critical for plant recruitment in intact communities, as well as for restoration efforts in arid ecosystems. This study determined the effects of temperature and water stress on recruitment processes in six grass species in the genus Triodia R.Br. from the Australian arid zone. Experiments in controlled environments were conducted on dormant and less‐dormant seeds at constant temperatures of 25°C, 30°C, 35°C, and 40°C, under well‐watered (Ψsoil = −0.15 MPa) and water‐limited (Ψsoil = −0.35 MPa) conditions. Success at three key recruitment stages—seed germination, emergence, and survival—and final seed viability of ungerminated seeds was assessed. For all species, less‐dormant seeds germinated to higher proportions under all conditions; however, subsequent seedling emergence and survival were higher in the more dormant seed treatment. An increase in temperature (35–40°C) under water‐limited conditions caused 95%–100% recruitment failure, regardless of the dormancy state. Ungerminated seeds maintained viability in dry soil; however, when exposed to warm (30–40°C) and well‐watered conditions, loss of viability was greater from the less‐dormant seeds across all species. This work demonstrates that the transition from seed to established seedling is highly vulnerable to microclimatic constraints and represents a critical filter for plant recruitment in the arid zone. As we demonstrate temperature and water stress‐driven mortality between seeds and established seedlings, understanding how these factors influence recruitment in other arid‐zone species should be a high priority consideration for management actions to mitigate the impacts of global change on ecosystem resilience. The knowledge gained from these outcomes must be actively incorporated into restoration initiatives.