AbstractThe cover of woody perennial plants (trees and shrubs) in arid ecosystems is at least partially constrained by water availability. However, the extent to which maximum canopy cover is limited by rainfall and the degree to which soil water holding capacity and topography impacts maximum shrub cover are not well understood. Similar to other deserts in the U.S. southwest, plant communities at the Jornada Basin Long‐Term Ecological Research site in the northern Chihuahuan Desert have experienced a long‐term state change from perennial grassland to shrubland dominated by woody plants. To better understand this transformation, and the environmental controls and constraints on shrub cover, we created a shrub cover map using high spatial resolution images and explored how maximum shrub cover varies with landform, water availability, and soil characteristics. Our results indicate that when clay content is below ~18%, the upper limit of shrub cover is positively correlated with plant available water as mediated by surface soil clay influence on water retention. At surface soil clay contents >18%, maximum shrub cover decreases, presumably because the amount of water percolating to depths preferentially used by deep‐rooted shrubs is diminished. In addition, the relationship between shrub cover and density suggests that self‐thinning occurs in denser stands in most landforms of the Jornada Basin, indicating that shrub–shrub competition interacts with soil properties to constrain maximum shrub cover in the northern Chihuahuan Desert.