Investigating how leaf functional traits change with precipitation gradients is important for understanding the dominant plant adaptation strategies to cope with environmental change. The functional traits of the desert steppe dominant plants, Agropyron mongolicum, Stipa breviflora, and Lespedeza davurica varieties, were analyzed, as were the correlations between soil moisture, nutrients, microbial characteristics, and the response traits. This field study was conducted at Dashuikeng Grassland Research Station, Yanchi County (106°58'E, 37°24'N, average elevation, 1 560 m), Ningxia Hui Autonomous Region, China. This region covers a large ecosystem of desert steppe that characterized by low rainfall and uneven precipitation, along the southwest edge of the Mu Us Sandy Land. In the study desert steppe area on the southeastern margin of the Tengger Desert, the average annual precipitation was only 298.3 mm during the 60 years from 1959 to 2019. The precipitation was regulated by the measurement of artificial rain using rainwater shed and sprinkler irrigation technologies, in order to evaluate precipitation effects on the biological soil crusts in desert steppe compared with natural precipitation. 12 precipitation treatments (6 m×6 m) were set up at the test station in early March 2018, where 3 m wide buffer zone was designed between each plot. Control conditions of precipitation were designed via the shelter and sprinkler irrigation system, including 3 precipitation treatments, natural precipitation (CK), low water treatment (LW, 50% water reduction), and high water treatment (HW, 50% increase). Each precipitation treatment has 4 replicates. In the same period, small weather stations were set up in the test area. TRIME-PICO TDR Portable Soil Moisture Meter (made in Germany) was used for the data collection of precipitation in the soil water depth of 10 cm. The results showed that the leaf area (LA) and leaf dry matter content (LDMC) of all plants increased significantly with high water treatment (HW, 50% increase), and low water treatment (LW, 50% water reduction) significantly reduced the LA and LDMC of Stipa breviflora and Lespedeza davurica. Precipitation had no effect on the specific leaf area (SLA) of Stipa breviflora but the SLA of Agropyron mongolicum significantly increased with the LW treatment. LW significantly improved the leaf nitrogen content (LNC) and leaf phosphorus content (LPC) of Agropyron mongolicum and Stipa breviflora. In Agropyron mongolicum and Stipa breviflora, LW significantly improved the leaf nitrogen content (LNC) and leaf phosphorus content (LPC). HW significantly reduced the soil carbon (C) and nitrogen (N) content, and both treatments significantly reduced the number of fungi, but the number of actinomycetes and the soil microbial biomass carbon (SMBC) and nitrogen (SMBN) significantly increased. All plants had a significant positive correlation between LA and soil moisture. Agropyron mongolicum and Stipa breviflora adapted to an arid habitat by increasing SLA, LNC, and LPC, and the key indicators of soil phosphorus (P) and the effectiveness of microbial biomass may be LNC and LPC. Lespedeza davurica used self-regulating nutrient utilization strategies to adapt to habitats with low C, N, and P and low microbial activity, thereby confirming its dominant position in the community.