Climate change modifies environmental conditions, resulting in altered precipitation patterns, moisture availability and nutrient distribution for microbial communities. Changes in water availability are projected to affect a range of ecological processes, including the decomposition of plant litter and carbon cycling. However, a detailed understanding of microbial stress response to drought/flooding is missing. In this study, an intermittent lake is taken up as a model for changes in water availability and how they affect the functional pathways in microbial communities of the decomposing Phragmites australis litter. The results show that most enriched functions in both habitats belonged to the classes of Carbohydrates and Clustering-based subsystems (terms with unknown function) from SEED subsystems classification. We confirmed that changes in water availability resulted in altered functional makeup of microbial communities. Our results indicate that microbial communities under more frequent water stress (due to fluctuating conditions) could sustain an additional metabolic cost due to the production or uptake of compatible solutes to maintain cellular osmotic balance. Nevertheless, although prolonged submergence seemed to have a negative impact on several functional traits in the fungal community, the decomposition rate was not affected.