1. Precipitation alteration and nitrogen (N) deposition caused by anthropogenic activities could profoundly affect the structure and functioning of plant communities in arid ecosystems. However, the plant community impacts conferred by large temporal changes in precipitation, especially with a concurrent increase in N deposition, remain unclear. 2. To address this uncertainty, from 2016–2017, an in situ field experiment was conducted to examine the effects of five precipitation levels, two N levels and their interaction on the plant community function and composition in a desert steppe in northern China. 3. Aboveground net primary production (ANPP) and plant community-weighted mean (CWM) height significantly increased with increasing precipitation, and both were well fitted with a positive linear model, but with a higher slope under N addition. The ANPP increase was primarily driven by the increase in Artemisia capillaris, a companion forb sensitive to precipitation variation. The plant community composition shifted with precipitation enhancement—from a community dominated by Stipa tianschanica, a perennial grass, to a community dominated by Artemisia capillaris. 4. Synthesis The findings imply that ecosystem sensitivity to future changes in precipitation variability will be mediated by two potential mechanisms: concurrent N deposition and plant community-level change. It is suggested that we should consider the vegetation compositional shift and multiple resource colimitation in assessing the sensitivity of terrestrial ecosystems to climate change.