Biological soil crusts (biocrusts) are consortiums of cyanobacteria and other microorganisms that are critical for dryland ecosystem function, thereby stabilizing soils, enhancing nutrient cycling, and bolstering overall resilience. However, biocrusts have a low tolerance for grazing (especially trampling), making them highly susceptible to degradation, and their recovery following degradation remains a major challenge. Here, an assessment was conducted in a desert steppe of Inner Mongolia, China, to determine the long-term impact of fencing-mediated grazing exclusion on soil microbial communities and biocrust development. We examined bacterial community (16S rRNA and nifH gene) composition, abundance, diversity using high-throughput sequencing and quantitative PCR, and analysed key soil properties across three disturbance regimes: biocrust soils within 15-year grazing exclusion (IB), lightly trampling disturbed biocrust soils outside the enclosure (OB), and heavily trampling disturbed soils without biocrusts outside the enclosure (NB). Results showed that fencing significantly increased soil organic carbon, total nitrogen, chlorophyll-a, and electrical conductivity levels, while concurrently reducing bacterial alpha diversity. Despite this decline in diversity, gene absolute abundances of 16S rRNA and nifH increased markedly under grazing exclusion, indicating enhanced total microbial biomass and nitrogen fixation potential. In particular, cyanobacterial relative abundance increased from 2% in NB to 44% in IB plots, with dominant taxa including Microcoleus sp., Oscillatoria sp., and Nostoc sp. Spearman correlation analysis revealed strongly positive correlations between cyanobacterial composition and soil nutrient levels. These findings suggest that grazing exclusion effectively promotes cyanobacterial proliferation and biocrust development, albeit at the cost of reduced bacterial diversity. Our results underscore the central ecological role of dominant taxa (e.g., cyanobacteria) instead of microbial diversity in early-stage biocrust restoration and imply the potential of nature-based solutions, such as grazing exclusion and targeted cyanobacterial inoculation, to restore soil microbial function and accelerate biocrust recovery in degraded drylands. Keywords: Grazing exclusion; Biocrust development; Bacterial community; Cyanobacterial abundance.