AbstractShifts in precipitation regimes are an inherent component of climate change, but in low‐energy systems are often assumed to be less important than changes in temperature. Because soil moisture is the hydrological variable most proximally linked to plant performance during the growing season in arctic‐alpine habitats, it may offer the most useful perspective on the influence of changes in precipitation on vegetation. Here we quantify the influence of soil moisture for multiple vegetation properties at fine spatial scales, to determine the potential importance of soil moisture under changing climatic conditions. A fine‐scale data set, comprising vascular species cover and field‐quantified ecologically relevant environmental parameters, was analysed to determine the influence of soil moisture relative to other key abiotic predictors. Soil moisture was strongly related to community composition, species richness and the occurrence patterns of individual species, having a similar or greater influence than soil temperature, pH and solar radiation. Soil moisture varied considerably over short distances, and this fine‐scale heterogeneity may contribute to offsetting the ecological impacts of changes in precipitation for species not limited to extreme soil moisture conditions. In conclusion, soil moisture is a key driver of vegetation properties, both at the species and community level, even in this low‐energy system. Soil moisture conditions represent an important mechanism through which changing climatic conditions impact vegetation, and advancing our predictive capability will therefore require a better understanding of how soil moisture mediates the effects of climate change on biota.