The microbial activity in sandy soils of the Horqin Sandy Land is typically low. Pelletized straw, an innovative soil amendment, can rapidly enhance soil fertility, but its effects on microbial functions and community structure remain unclear. A field experiment compared no fertilizer (CK), inorganic fertilizer only (IF), and two pelletized straw rates (75 and 150 Mg ha(-)& sup1;, PS75 and PS150) co-applied with IF, including single and annual incorporation. This study assessed whether pelletized straw improves microbial biomass, enzyme activity, and community composition. The results demonstrated that pelletized straw directly promote the accumulation of microbial biomass carbon, nitrogen, and phosphorus, enhancing the activities of beta-1,4-glucosidase, beta-1,4-N-acetylglucosaminidase, and acid phosphatase. Microbial biomass nitrogen exhibited the strongest correlation with enzyme activity. PS150 elevated total PLFA content by 11.07-17.27 times over CK and 5.33-8.87 times over IF, favoring bacteria, fungi, actinobacteria, and both Gram-positive and Gram-negative bacteria. Redundancy analysis linked these shifts to coordinated carbon and nitrogen enzyme activities, while Mantel tests confirmed pelletized straw enhanced community structure by improving soil physicochemical properties and biological activity. Structural equation modeling (SEM) confirmed that sustained high-dose pelletized straw incorporation (150 Mg ha(-)& sup1; yr(-)& sup1;) enhanced microbial biomass accumulation and optimized community assembly by driving the proliferation of key microbial groups. Pelletized straw optimizes sandy soil functionality by coupling organic input decomposition with microbial community recruitment, ultimately strengthening carbon-nitrogen coupling and supporting arid land restoration.