Arbuscular mycorrhizal fungi (AMF), an important group of plant root symbionts, remain poorly studied in the Neotropics. We used Illumina LSU amplicon sequencing to test whether AMF communities in soil and roots are shaped by deterministic or neutral processes along a 20° latitudinal transect in the Caatinga of Brazil, a unique dry forest eco-region. Glomeraceae was the most abundant and diverse family, resembling more paleotropical Africa and European croplands than other tropical forests from South America. AMF communities showed strong biogeographic structure inconsistent with a classical latitudinal diversity gradient, and further differed between soil and roots. Soil AMF biogeography was best correlated with precipitation; richness increased towards both ends of the latitudinal transect where precipitation increased, and community composition converged. Root AMF diversity weakened towards the equator, at a latitude where soil AMF diversity was highest. Root AMF biogeography correlated to temperature, with decreasing diversity at higher temperatures. We found no evidence of phylogenetic niche conservatism among AMF taxa. Our results suggest that niche-based processes in relation to regional climate, most importantly precipitation and temperature, shape the biogeography of AMF across the Caatinga, with niche partitioning among closely related AMF taxa. Given the expected decrease in precipitation and increase in temperature in the future, climate change may strongly affect AMF biodiversity in neotropical dry forests.