Plant interactions with soil microbiota are important drivers of biodiversity and ecosystem function, but climate change can modify these interactions by directly altering the soil community, which can affect the direction and magnitude of such interactions. We manipulated water quantity and soil microbiota of two populations of three plant species that differ in their interactions with soil microbiota and assessed germination and biomass production under conditions that mimicked a rainfall gradient in SE Spain. We assessed the importance of soil microbiota from home and away (drier) sites for alleviating or exacerbating the effects of drier conditions. Our results suggest that home soil microbiota enhanced germination of the legume Trifolium stellatum. Conversely, we found that the grass, Lagurus ovatus, and the forb, Sisymbrium erysimoides, produced more biomass under moderate drying with soil microbiota from a drier site than with home soil microbiota, suggesting that dry-adapted soil microbiota alleviated the negative effects of drier conditions for these species. This maintenance of productivity with dry-adapted soil microbiota under drier conditions was found despite simultaneous reductions in leaf dry matter content and root-to-shoot ratio that would typically be less optimal trait responses under reduced water availability. Severe water limitation resulted in decreased plant biomass regardless of the plant species and soil inoculum, indicating a threshold effect whereby severe water limitation on growth supersedes the beneficial effects of soil microbiota. Overall, our results show that species identity, the severity of water limitation and soil microbiota interact to determine the response of plants to drier conditions.