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• Increased precipitation promotes soil respiration in moderate shrubby steppe. • Soil respiration in severe shrubby steppe is insensitive to water and N addition. • Soil respiration in response to resource changes depends on shrub invasion stage. • Soil respiration in shrub-encroached steppe is dominated by water availability. • Biotic drivers shift from plant community to microbial community as shrub-invasion. In the context of global change, changes in precipitation patterns and increases in atmospheric nitrogen (N) deposition have important impacts on grassland ecosystem processes and functions, such as soil respiration. However, most studies on the effects of increased precipitation and N enrichment on soil respiration have focused on pure grassland vegetation types (such as typical steppe), but less on grassland at different stages of shrub encroachment. Here, we examined the effects of increased precipitation and N enrichment on soil respiration and its components (heterotrophic and autotrophic respiration) in different stages of shrub-encroached steppe (i.e., no shrub invasion, light, moderate and severe encroachment) based on water and N addition experiments. Our results showed that increased precipitation greatly promoted soil respiration in typical steppe, lightly and moderately shrub-encroached steppe, but had no significant effects in severely encroached steppe; particularly, soil respiration in a wet year (2021) was significantly higher than that in a dry year (2020). However, N addition had no significant effect on soil respiration across the four stages of shrub encroachment, mainly due to the severe soil water limitation. In general, shrub encroachment significantly reduced soil respiration in Inner Mongolia steppe, mainly by increasing soil temperature, but decreasing soil moisture, microbial biomass and root biomass. We found that the driving factors of soil respiration varied with the development of shrub encroachment, especially the biological factors gradually shifted from aboveground plant community to underground microbial community. These findings have important implications for assessing carbon emissions from arid and semi-arid grasslands under global change. Considering that the effects of increased precipitation and N deposition on shrub-encroached steppe (especially severely encroached steppe) were different from those of typical steppe, the stage of shrub encroachment should be fully considered when constructing carbon cycle models to accurately evaluate the carbon emissions of degraded grassland. [Display omitted] [ABSTRACT FROM AUTHOR]