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Abstract Long-term climate history can influence rates of soil carbon cycling but the microbial traits underlying these legacy effects are not well understood. Legacies may result if historical climate differences alter the traits of soil microbial communities, particularly those associated with carbon cycling and stress tolerance. However, it is also possible that contemporary conditions can overcome the influence of historical climate, particularly under extreme conditions. Using shotgun metagenomics, we assessed the composition of soil microbial functional genes across a mean annual precipitation gradient that previously showed evidence of strong climate legacies in soil carbon flux and extracellular enzyme activity. Sampling coincided with recovery from a regional, multi-year severe drought, allowing us to document how the strength of climate legacies varied with contemporary conditions. We found increased investment in genes associated with resource cycling with historically higher precipitation across the gradient, particularly in traits related to resource transport and complex carbon degradation. This legacy effect was strongest in seasons with the lowest soil moisture, suggesting that contemporary conditions—particularly, resource stress under water limitation—influences the strength of legacy effects. In contrast, investment in stress tolerance did not vary with historical precipitation, likely due to frequent periodic drought throughout the gradient. Differences in the relative abundance of functional genes explained over half of variation in microbial functional capacity—potential enzyme activity—more so than historical precipitation or current moisture conditions. Together, these results suggest that long-term climate can alter the functional potential of soil microbial communities, leading to legacies in carbon cycling.