Assessing the ecological importance of clouds has substantial implications for our basic understanding of ecosystems and for predicting how they will respond to a changing climate. This study was conducted in a coastal Bishop pine forest ecosystem that experiences regular cycles of stratus cloud cover and inundation in summer. Our objective was to understand how these clouds impact ecosystem metabolism by contrasting two sites along a gradient of summer stratus cover. The site that was under cloud cover ~15% more of the summer daytime hours had lower air temperatures and evaporation rates, higher soil moisture content, and received more frequent fog drip inputs than the site with less cloud cover. These cloud-driven differences in environmental conditions translated into large differences in plant and microbial activity. Pine trees at the site with greater cloud cover exhibited less water stress in summer, larger basal area growth, and greater rates of sap velocity. The difference in basal area growth between the two sites was largely due to summer growth. Microbial metabolism was highly responsive to fog drip, illustrated by an observed ~3-fold increase in microbial biomass C with increasing summer fog drip. In addition, the site with more cloud cover had greater total soil respiration and a larger fractional contribution from heterotrophic sources. We conclude that clouds are important to the ecological functioning of these coastal forests, providing summer shading and cooling that relieve pine and microbial drought stress as well as regular moisture inputs that elevate plant and microbial metabolism. These findings are important for understanding how these and other seasonally dry coastal ecosystems will respond to predicted changes in stratus cover, rainfall, and temperature.