Water and nitrogen are primary limiting factors in semiarid grassland ecosystems. Our knowledge is still poor regarding the interactive effects of water and N addition on soil microbial communities, although this information is crucial to reveal the mechanisms of the terrestrial ecosystem response to global changes. We addressed this problem by conducting a field experiment with a 15% surplus of the average rainfall under three levels of N addition (50, 100, and 200 kg N ha–1 yr–1) in two consecutive years in Inner Mongolia, China. Microbial community composition and functional diversity were analyzed based on phospholipid fatty acids (PLFA) and BIOLOG techniques, respectively. The results showed that water addition did not affect the soil microbial community composition, but much more yearly precipitation generally decreased the PLFA concentration, which implied a fast response of soil microbes to changes of water condition. Soil fungi was depressed only by N addition at the high level (200 kg N ha–1 yr–1) and without hydrologic leaching, while Gram-negative bacteria was suppressed probably by plant competition at high level N addition but with hydrologic leaching. The study found unilateral positive/negative interactions between water and N addition in affecting soil microbial community, however, climate condition (precipitation) could be a significant factor in disturbing the interactions. This study highlighted that: (1) The sustained effect of pulsed water addition was minimal on the soil microbial community composition but significant on the microbial community functional diversity and (2) the complex interaction between water and N addition on soil microbial community related to the inter-annual variation of the climate and plant response.