The cosmic-ray neutron probe measures soil moisture over tens of hectares, thus averaging spatially variable soil moisture fields. A previous paper described how variable soil moisture profiles affect the integrated cosmic-ray neutron signal from which depth-average soil moisture is computed. Here, we investigate the effect of horizontal heterogeneity on the relationship between neutron counts and average soil moisture. Observations from a distributed sensor network at a site in southern Arizona indicate that the horizontal component of the total variance of the soil moisture field is less variably in time than the vertical component. Using results from neutron particle transport simulations we show that 1-D binary distributions of soil moisture may affect both the mean and variance of neutron counts of a cosmic-ray neutron detector placed arbitrarily in a soil moisture field, potentially giving rise to an underestimate of the footprint average soil moisture. Similar simulations that used 1-D and 2-D Gaussian soil moisture fields indicate consistent mean and variances of a randomly placed detector if the correlation length scales are short (less than ∼30 m) and/or the soil moisture field variance is small (<0.032 m6 m−6). Taken together, these soil moisture observations and neutron transport simulations show that horizontal heterogeneity likely has a small effect on the relationship between mean neutron counts and average soil moisture for soils under natural conditions.