High daily temperature range of soil (DTRsoil) negatively affects soil microbial biomass and activity, but its interaction with seasonal soil moisture in regulating ecosystem function remains unclear. For our 5-year field study in the Chihuahuan Desert, we suspended shade cloth 15 cm above the soil surface to reduce daytime temperature and increase nighttime soil temperature compared to unshaded plots, thereby reducing DTRsoil (by 5 ºC at 0.2 cm depth) without altering mean temperatures. Microbial biomass production was primarily regulated by seasonal precipitation with the magnitude of the response dependent on DTRsoil. Reduced DTRsoil more consistently increased microbial biomass nitrogen (MBN; +38%) than microbial biomass carbon (MBC) with treatment responses being similar in spring and summer. Soil respiration depended primarily on soil moisture with responses to reduced DTRsoil evident only in wetter summer soils (+53%) and not in dry spring soils. Reduced DTRsoil had no effect on concentrations of dissolved organic C, soil organic matter (SOM), nor soil inorganic N (extractable NO3 (-)-N + NH4 (+)-N). Higher MBN without changes in soil inorganic N suggests faster N cycling rates or alternate sources of N. If N cycling rates increased without a change to external N inputs (atmospheric N deposition or N fixation), then productivity in this desert system, which is N-poor and low in SOM, could be negatively impacted with continued decreases in daily temperature range. Thus, the future N balance in arid ecosystems, under conditions of lower DTR, seems linked to future precipitation regimes through N deposition and regulation of soil heat load dynamics.