Aims <p>Dryland ecosystems are susceptible to variations in precipitation. Biodiversity plays a vital role in regulating ecosystem functions. However, the effects of altered precipitation on plant and soil microbial diversity and their relationship with ecosystem multifunctionality (EMF) in desert steppes remain unclear.</p> Methods <p>We conducted a three–year precipitation manipulation experiment in a desert steppe in northwestern China to evaluate how altered precipitation influences plant and microbial diversity, EMF, and individual ecosystem functions.</p> Results <p>R33 significantly decreased the Shannon and Pielou indices of plant, as well as EF–GP and EF–P. R66 significantly decreased EMF, EF–GP, EF–N, and EF–P. In contrast, only R166 significantly decreased the Pielou index of plant. There were significant interannual variations in plant diversity, microbial diversity, EMF, and single functions. The interaction between precipitation and year significantly affected only plant diversity, microbial diversity, and EF–GP. The multi–threshold approach indicated that ecosystem functions were positively correlated with plant and fungal diversity and negatively correlated with bacterial diversity under altered precipitation. Additionally, the structural equation model demonstrated that precipitation regulated EMF by affecting plant and microbial diversity through changes in soil water content. Compared with plant diversity, microbial diversity was more significant in regulating the response of EMF to altered precipitation.</p> Conclusions <p>This study demonstrates that plant and microbial diversity jointly regulate ecosystem functions under altered precipitation, but microbial diversity plays a more prominent role. Therefore, the importance of microbial communities should be given particular attention when predicting and managing the response of dryland ecosystems to future climate–induced precipitation changes.</p>