Abstract Ecosystem productivity is largely dependent on soil nutrient cycling which, in turn, is driven by decomposition rates governed by locally adapted below-ground microbial and soil communities. How climate change will impact soil biota and the associated ecosystem functioning, however, remains largely an open question. To address this gap, we first characterized differences in soil microbial and nematode communities as well as functional characteristics from soils collected from the foothills or in sub-alpine elevations of the Alps. We next performed a full-factorial reciprocal transplant common garden experiment at two elevations, and asked whether elevation-related functional and taxonomic differences are maintained or can be altered depending on the local climatic conditions. For this, we separately transplanted soil microbial and nematode communities from low and high elevation in their home or opposite elevation in pots added with a common plant community. We found evidence for taxonomic and functional differentiation of the microbial and nematode communities when collected at high or low elevation. Specifically, we observed a decrease in microbial diversity and activity at high elevation, and additionally, through nematodes' functional characterization, we found increased fungal-dominated energy channels at high elevation. Moreover, according to the reciprocal transplant experiment, while we found little effect of soil biodiversity change based on elevation of origin on plant growth and plant community composition, soils inoculated with microbes originating from low elevation respired more than those originating from high elevation, particularly when at low elevation. This observation correlates well with the observed faster carbon degradation rates by the low elevation microbial communities. Climate change can reshuffle soil communities depending on organism-specific variation in range expansion, ultimately affecting soil fertility and carbon-cycle dynamics. A free Plain Language Summary can be found within the Supporting Information of this article.