Alterations in global and regional precipitation patterns are expected to affect plant and ecosystem productivity, especially in water-limited ecosystems. This study examined the effects of natural and supplemental (25% increase) seasonal precipitation on a sotol grassland ecosystem in Big Bend National Park in the Chihuahuan Desert. Physiological responses – leaf photosynthesis at saturating light (Asat), stomatal conductance (gs), and leaf nitrogen [N] – of two species differing in their life form and physiological strategies (Dasylirion leiophyllum, a C3 shrub; Bouteloua curtipendula, a C4 grass) were measured over 3 years (2004–2006) that differed greatly in their annual and seasonal precipitation patterns (2004: wet, 2005: average, 2006: dry). Precipitation inputs are likely to affect leaf-level physiology through the direct effects of altered soil water and soil nitrogen. Thus, the effects of precipitation, watering treatment, soil moisture, and nitrogen were quantified via multivariate hierarchical Bayesian models that explicitly linked the leaf and soil responses. The two species differed in their physiological responses to precipitation and were differentially controlled by soil water vs. soil nitrogen. In the relatively deeply rooted C3 shrub, D. leiophyllum, Asat was highest in moist periods and was primarily regulated by deep (16–30 cm) soil water. In the shallow-rooted C4 grass, B. curtipendula, Asat was only coupled to leaf [N], both of which increased in dry periods when soil [N] was highest. Supplemental watering during the wet year generally decreased Asat and leaf [N] in D. leiophyllum, perhaps due to nutrient limitation, and physiological responses in this species were influenced by the cumulative effects of 5 years of supplemental watering. Both species are common in this ecosystem and responded strongly, yet differently, to soil moisture and nitrogen, suggesting that changes in the timing and magnitude of precipitation may have consequences for plant carbon gain, with the potential to alter community composition.