Climate change has triggered longer and more frequent drought worldwide, profoundly impacting terrestrial ecosystems. These drought impacts can be compounded by other factors such as nitrogen (N) deposition, yet their combined effects remain poorly understood. We conducted a decade-long field experiment in a desert shrub steppe in northern China to examine the effects of N addition on plant communities during a period of climatic aridification. We found that climatic aridification significantly reduced vegetation cover particularly affecting the dominant shrub Artemisia ordosica and perennial forbs, while drought-adapted groups such as leguminous shrubs, perennial grasses, and annuals showed greater resistance. The loss of dominant shrub canopy created opportunities for colonization by drought-tolerant species, leading to an increase in species richness. While N addition had minimal effects on overall vegetation cover and species richness, it substantially altered community composition. Nitrogen addition had little influence on A. ordosica but impaired leguminous shrub growth. Although it promoted the growth of perennial grasses and annuals, higher levels of N addition intensified drought impacts on these groups. Our results suggest that climatic aridification caused substantial canopy loss and shifted the plant community toward greater richness of drought-tolerant groups. However, N addition tended to exacerbate drought impacts on these groups, potentially increasing the risk of vegetation degradation. Our findings highlight the potential for N enrichment to intensify drought impacts on shrub steppe ecosystems, emphasizing the need for conserving drought-tolerant species and optimizing fertilizer application for adaptive dryland management under global change.