Climate change predictions indicate that extremely dry years are likely to become more frequent in the future. In the present study the potential impacts of drought on the microbial processes and carbon and nitrogen dynamics in the soil were investigated in two heathland ecosystems in Denmark and the UK, at contrasting water inputs of ca. 750 and ca. 1700 mm per year, respectively. The drought treatment involved removal of all precipitation for 2 months during summer. In general the two ecosystems reacted differently. At the drier site in Denmark the drought reduced the microbial activity shown by a 27% reduced below ground CO2 emission, and reduced microbial and soil solution carbon (C) and nitrogen (N) levels. In contrast, microbial activity at the wetter UK site seemed to benefit from the drought as indicated by a 22% increase in below ground CO2 emission caused by the drought treatment. At both sites drought led to an increase in the microbial C/N ratio suggesting a change towards a more fungal-dominated microbial community and decomposition of more complex substrates. The drought-induced reduced availability of nutrients in both heath types may counteract changes in plant competitive patterns and in species composition caused by anthropogenic N deposition in these nutrient-limited ecosystems.