The ecological significance of coarse woody debris (CWD) is usually highlighted in forests where CWD constitutes much of an ecosystem's carbon (C) source and stores. However, a unique addition of CWD is occurring in semi-deserts for which there is no ecological analog. To stem catastrophic wildfires and create firebreaks, whole Juniperus osteosperma (Torr.) and Pinus edulis (Engelm.) trees are being mechanically shredded into CWD fragments and deposited on soils previously exposed to decades of tree-induced changes that encourage "tree islands of fertility." To investigate consequences of CWD on C and nitrogen (N) cycling, we evaluated microbial metabolic activity and N transformation rates in Juniperus and Pinus surface and subsurface soils that were either shredded or left untreated. We sampled three categories of tree cover on over 40 tree cover encroachment sites. Tree cover categories (LOW = 0-15%, MID ≥ 15-45%, HIGH ≥ 45%) were used to indicate tree island development at time of treatment. In conjunction with our microbial measurements, we evaluated the frequency of three exotic grasses, and thirty-five native perennial grasses to identify links between belowground and aboveground processes. The addition of CWD increased microbial biomass by almost two-fold and increased microbial efficiency, measured as the microbial quotient, at LOW Juniperus cover. C mineralization was enhanced by CWD only in Pinus soils at the edge of tree canopies. The addition of CWD had little impact on microbial activity in subsurface soils. CWD enhanced the availability of dissolved organic C (DOC) and phosphorus (P) but tended to decrease the overall quality of labile DOC, measured as the ratio of soil microbial biomass to DOC. This suggested that the increase in DOC alone or other environmental factors novel to CWD additions lead to the increase in biomass and efficiency. P concentrations were consistently higher following CWD additions for all encroachment levels. The CWD additions decreased N mineralization and nitrification in Juniperus and Pinus soils at LOW and MID tree cover but only in surface soils, suggesting that less inorganic N was available to establishing or residual plants. The frequency of native perennial grasses, especially Elymus elymoides (Raf.), was at least 65% higher under CWD additions for all categories of tree cover, while the frequencies of exotic annual and perennial grasses were not impacted by CWD. The frequency of all perennial grasses ranged from 10-27%. Our results suggest that CWD enhanced microbial activity even when the quality of C substrates declined requiring microbes to immobilize more N. The reduction in inorganic N may promote the establishment and growth of native perennial grasses. Ultimately, the addition of CWD improved soil conditions for microbes in tree islands of fertility.