Species interactions are the fundamental architecture of community assembly, yet how environmental context shapes these interdependencies remains a central question in ecology. The stress-gradient hypothesis (SGH) predicts a shift from competition to facilitation as abiotic stress intensifies, but its applicability to microbial communities and whether this shift is driven by niche partitioning or functional modification remains poorly understood. Using a 1500-km environmental gradient in Northwestern China, we tested the SGH paradigm with dryland biocrusts as a model system. Through integrated network analysis, niche-trait assessments and piecewise structural equation modelling, we identify niche overlap as a critical regulator of competition-facilitation transitions during biocrust succession, arranged within a patchy spatial pattern. High-stress cyanobacterial crusts exhibit tightly integrated and facilitation-driven communities, whereas benign moss-dominated crusts display modular networks and elevated competition. Our results demonstrate that multivariate abiotic stress regulates interaction outcomes primarily by mediating a priori niche overlap rather than functional dissimilarity, subsequently promoting phylogenetic divergence while constraining taxonomic diversity. Furthermore, as stress declined, we observed a significant increase in functional redundancy and a decoupling of taxonomic and functional structures, suggesting that environmental amelioration allows for the accumulation of ecological insurance. These findings provide a compelling validation of the microbial SGH, highlighting the trade-offs between niche architecture and functional optimization. As climate change amplifies environmental pressures, these findings illuminate the potential to leverage the facilitative interdependencies of soil microbiome for the success of dryland restoration through niche engineering.