Purpose Rare-earth elements (REEs) have been listed as emerging pollutants, and REEs often occur together with heavy metals (HMs) in the environment. Large amounts of REEs and their coexisting HMs enter into the surrounding soils through dust, surface runoff, and leachate, causing serious REE and HM co-contamination and resulting in ecological crisis. The ecological effects caused by REEs have been gradually concerned, but ignore the synergistic effect of coexistence with HMs. Soil microorganisms are closely related to the soil ecosystem stability. At present, under long-term REE-HM disturbance, the response of bacterial and fungal communities and the effects of community functions remain unclear. In this study, the response of bacterial and fungal communities to different REE and HM co-contamination levels and the community predicted function were analyzed. Methods 16S rRNA and ITS1 high-throughput sequencing were performed for bacteria and fungi, respectively. The bacteria community functions were predicted using the PICRUSt2 method. Results The co-contamination caused decreases in bacterial and fungal community richness and diversity, with significant changes in community structure and composition, especially in the most serious co-contaminated soils. With the increase in the pollution levels, the bacterial communities became reorganize, whereas fungal communities had a certain buffer capacity. The microbial symbiotic pattern changed under severe co-contamination conditions, and microorganisms enhanced interactions to advance the dominant taxa adaptability or resistance. Bacterial communities developed more competitive relationships, whereas fungal communities developed more symbiotic relationships. Thus, bacteria are more sensitive than fungi. PICRUSt2 prediction results showed that bacterial community could resist cell damage caused by exotic REEs and HMs by strengthening the efflux transport system, DNA repair function, cell defense mechanism, and detoxification mechanism. The co-contamination might enhance bacterial antibiotic resistance; dissimilatory and assimilatory nitrate reduction and denitrification might be the nitrogen metabolic predominant processes. Conclusion For the first time, we systematically confirmed that bacteria and fungi respond differently under long-term REE and HM exposure: bacterial are more sensitive than fungi. The ecological functions of bacterial community were changed, and the ecological risk of desert steppe soil environment might be increased. Our results have important significance for ecological risk assessments in co-contamination environment.