Shrub encroachment and nitrogen (N) deposition have become two critical factors that cause global grassland ecosystems degradation. However, the combined effects of shrub branch shelter and N deposition on soil microbial activity and litter decomposition in grasslands remain obscure. This study adopted four branch shelter levels of 0 % (no shelter), 30 %, 50 % and 70 % as the main plots, and four N additions including 0 g m- 2 a1, 10 g m2 a1, 20 g m2 a1 and 40 g m2 a1 as subplots in a Northwest China desert steppe. Subsequently, soil temperature, soil moisture, pH, N content, activities of C and N cycling-related enzymes, and microbial community structure between 0 and 5 cm were determined post 2 years, and litter decomposition from dominant plants was also determined. The results demonstrated that N additions increased the soil inorganic N content, but decreased soil pH value. However, branch shelters enhanced soil moisture, yet had no effect on soil pH value and N content. As results, N additions inhibited soil N cycling-related enzyme activities, but branch shelters accelerated the activities of the most tested extracellular enzymes. Branch shelters also presented opposite potentials to N additions in affecting soil microbial community structure. Overall, shrub shelters counteracted the negative effects of nitrogen deposition on soil enzyme activity and microbial community structure. Consequently, both branch shelter and N addition promoted litter decomposition. Therefore, branch shelter could be used as feasible measures to restore degraded grasslands caused by shrub encroachment and N deposition in arid and semiarid areas.