Nitrogen (N) limits plant growth in many terrestrial ecosystems, potentially constraining terrestrial ecosystem response to elevated CO2. In this study, elevated CO2 stimulated gross N mineralization and plant N uptake in two annual grasslands. In contrast to other studies that have invoked increased C input to soil as the mechanism altering soil N cycling in response to elevated CO2, increased soil moisture, due to decreased plant transpiration in elevated CO2, best explains the changes we observed. This study suggests that atmospheric CO2 concentration may influence ecosystem biogeochemistry through plant control of soil moisture.