The ongoing climate change is predicted to induce more weather extremes such as frequent drought and high-intensity precipitation events, causing more severe drying-rewetting cycles in soil. However, it remains largely unknown how these changes will affect soil nitrogen (N)-cycling microbes and the emissions of potent greenhouse gas nitrous oxide (N2O). Utilizing a field precipitation manipulation in a semi-arid grassland on the Loess Plateau, we examined how precipitation reduction (ca. −30%) influenced soil N2O and carbon dioxide (CO2) emissions in field, and in a complementary lab-incubation with simulated drying-rewetting cycles. Results obtained showed that precipitation reduction stimulated plant root turnover and N-cycling processes, enhancing soil N2O and CO2 emissions in field, particularly after each rainfall event. Also, high-resolution isotopic analyses revealed that field soil N2O emissions primarily originated from nitrification process. The incubation experiment further showed that in field soils under precipitation reduction, drying-rewetting stimulated N mineralization and ammonia-oxidizing bacteria in favor of genera Nitrosospira and Nitrosovibrio, increasing nitrification and N2O emissions. These findings suggest that moderate precipitation reduction, accompanied with changes in drying-rewetting cycles under future precipitation scenarios, may enhance N cycling processes and soil N2O emissions in semi-arid ecosystems, feeding positively back to the ongoing climate change.