Creosote‐bush [ Larrea tridentata (Sessé & Moc. ex DC.) Coville] shrubs in California's Mojave Desert support well‐developed soil resource islands, where individual shrubs define areas of elevated soil nutrients, water‐holding capacity, and microbial activity. To better understand the spatial variability of microbial communities and potential impacts on nutrient cycling in shrub ecosystems, we examined microbial communities using polar lipid fatty acids (PLFA) and several soil properties including δ 15 N, DNA, C and N contents under mature shrubs and as a function of horizontal distance (0–3 m) away from the base of the shrubs. Shrub‐base soils (0 m) contained more C and N, were slightly more acidic, and supported significantly larger microbial populations than soils between shrubs. The PLFA fingerprints also suggested that microbial communities, particularly at the shrub base, had a different composition than soils between shrubs, including a higher proportion of actinomycetes containing the biomarker 10me17:0. Soil respiration was generally highest at 0 m, corresponding with larger microbial biomass and larger C and N pools, but was highly variable, probably due to contributions from grasses and forbs. Average δ 15 N values resembled plant material at the shrub base (4‰) and were significantly isotopically enriched away from the shrubs (7‰), suggesting that fractionating losses of soil N occurred between shrubs. The elevated nutrient status of resource islands supported soil microbial communities that were larger, were different in character, respired more actively, and cycled N more tightly than those found in open spaces between shrubs. These open spaces “leak” isotopically light N from the soil.