Background and aims: Biocrusts are major contributors to dryland nutrient cycling by regulating C, N and P inputs and fuxes. However, our understanding about how the decomposition of biocrust constituents contributes to soil nutrient cycling in drylands is virtually unknown. Methods: We conducted a microcosm experiment to: i) evaluate the litter decomposition dynamics of two common biocrust-forming species with contrasting tissue chemistry and growth form (the lichen Cladonia foliacea and the moss Syntrichia caninervis), and ii) their effects on several soil variables related to soil functioning. Results: Cladonia litter decomposed gradually with time (92% total mass loss after 342 days), while Syntrichia litter decomposed much faster (92% total mass loss after 62 days, with no further losses until the end of the experiment at 342 days). We observed species-specifc effects of their litter on dissolved organic N (DON) and NH4+ depending on collection time, which changed the efects of litter decomposition on DON and pH regardless of the biocrust species considered. Overall, biocrust litter had a positive effect on SOC, DON, NH+4 and acid phosphatase activity. Conclusions: Our experimental results show that decomposition of biocrust tissues plays an important role in soil nutrient cycling, indicating that this process impacts the fertility and functioning of dryland soils. Keywords: Soil fertility · Microbial activity · Soil pH · Cladonia foliacea · Syntrichia caninervis.