The increasing frequency of drought events and nitrogen deposition have fundamentally changed soil microbial functions in terrestrial ecosystems. However, most studies have mainly concentrated on the impact of a single environmental factor on ecosystem functions; how drought and nitrogen enrichment interactively affect soil multifunctionality remains largely unknown. In this study, the effects of different drought scenarios [intense drought (ID), chronic drought (CD), and reduced rainfall frequency (RF)] and nitrogen addition on soil microbial biomass, and soil multifunctionality (determined using soil enzyme activity) were examined in the fourth year of a field manipulative experiment conducted in a typical steppe in northern China. The results demonstrated that both ID and CD significantly reduced soil multifunctionality, microbial biomass carbon (MBC) and microbial biomass nitrogen (MBN). The CD treatment also decreased the ratio of MBC to MBN, while RF had less impacts on soil multifunctionality and the biomass of soil microbes. In contrast, nitrogen addition enhanced soil multifunctionality, MBC and MBN. Structural equation modeling analysis demonstrated that drought decreased soil multifunctionality directly and indirectly by reducing MBN and soil water content, whereas nitrogen addition increased soil multifunctionality mainly by increasing MBN and soil inorganic nitrogen. This study provides the first experimental evidence of the opposing impacts of reduction in precipitation and nitrogen enrichment on soil microbial biomass and soil multifunctionality in a semiarid typical steppe, and suggests that nitrogen fertilization could be an effective measure to alleviate the negative effects of climate drought on soil functions in nitrogen- and water-limited grassland ecosystems.