Abstract Decline in soil biodiversity associated with anthropogenic activities has raised concerns about the consequences for ecosystem functions. It remains uncertain how important soil microbial diversity is relative to abiotic factors, and how they interact, in driving ecosystem processes. Here we present results of a soil microcosm experiment in which microbial diversity and moisture conditions were independently manipulated. Loss of microbial diversity led to higher rates of soil microbial respiration, and the diversity effect was maintained over time during the course of the experiment. Higher moisture also enhanced soil respiration; but the moisture effect reduced over time, more rapidly in microcosms of higher microbial diversity. Overall, loss of microbial diversity enhanced soil respiration to a greater extent than moisture elevation, and also exacerbated the response of soil respiration to water addition. Loss of negative species interactions in microcosms of lower microbial diversity might be the major reason for the diversity effects observed in this study. Our results suggest that the integrity of soil microbial communities be crucial for the maintenance of soil carbon storage function.