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Abstract Forest disturbance has well-characterized effects on soil microbial communities in tropical and northern hemisphere ecosystems, but little is known regarding effects of disturbance in temperate forests of the southern hemisphere. To address this question, we collected soils from intact and degraded Eucalyptus forests along an east–west transect across Tasmania, Australia, and characterized prokaryotic and fungal communities using amplicon sequencing. Forest degradation altered soil microbial community composition and function, with consistent patterns across soil horizons and regions of Tasmania. Responses of prokaryotic communities included decreased relative abundance of Acidobacteriota, nitrifying archaea, and methane-oxidizing prokaryotes in the degraded forest sites, while fungal responses included decreased relative abundance of some saprotrophic taxa (e.g. litter saprotrophs). Forest degradation also reduced network connectivity in prokaryotic communities and increased the importance of dispersal limitation in assembling both prokaryotic and fungal communities, suggesting recolonization dynamics drive microbial composition following disturbance. Further, changes in microbial functional groups reflected changes in soil chemical properties—reductions in nitrifying microorganisms corresponded with reduced NO3-N pools in the degraded soils. Overall, our results show that soil microbiota are highly responsive to forest degradation in eucalypt forests and demonstrate that microbial responses to degradation will drive changes in key forest ecosystem functions.