Arbuscular mycorrhizal (AM) fungi and a residue from dry olive cake (DOC) supplemented with rock phosphate (RP) and treated with either Aspergillus niger (DOC-A) or Phanerochaete chrysosporium (DOC-P), were assayed in a natural, semi-arid soil using Trifolium repens or Dorycnium pentaphyllum plants. The effects of the AM fungi and/or DOC-A were compared with P-fertilisation (P) over eleven successive harvests to evaluate the persistence of the effectiveness of the treatments. The biomass of dually-treated plants after four successive harvests was greater than that obtained for non-treated plants or those receiving the AM inoculum or DOC-A treatments after eleven yields. The AM inoculation was critical for obtaining plant growth benefit from the application of fermented DOC-A residue. The abilities of the treatments to prevent plant drought stress were also assayed. Drought-alleviating effects were evaluated in terms of plant growth, proline and total sugars concentration under alternative drought and re-watering conditions (8th and 9th harvests). The concentrations of both compounds in plant biomass increased under drought when DOC-A amendment and AM inoculation were employed together: they reinforced the plant drought-avoidance capabilities and anti-oxidative defence. Water stress was less compensated in P-fertilised than in DOC-A-treated plants. DOC-P increased D. pentaphyllum biomass, shoot P content, nodule number and AM colonisation, indicating the greater DOC-transforming ability of P. chrysosporium compared to A. niger. The lack of AM colonisation and nodulation in this soil was compensated by the application of DOC-P, particularly with AM inoculum. The management of natural resources (organic amendments and soil microorganisms) represents an important strategy that assured the growth, nutrition and plant establishment in arid, degraded soils, preventing the damage that arises from limited water and nutrient supply.