Mycorrhizal fungi have considerable effects on soil carbon (C) storage, as they control the decomposition of soil organic matter (SOM), by modifying the amount of soil nitrogen (N) available for free-living microbes. Through their access to organic N, ectomycorrhizal (ECM) fungi compete with free-living soil microbes; this competition is thought to slow down SOM decomposition. However, arbuscular mycorrhizal (AM) fungi cannot decompose SOM, and therefore must wait for N to first be processed by free-living microbes. It is unclear what form of N the ECM fungi and free-living microbes compete for, or which microbial groups compete for N with ECM fungi. To investigate this, we focused on the N transformation steps (i.e., the degradation of high-molecular-weight organic matter, mineralization, and nitrification) and the microbes driving each step. Simple comparisons between AM forests and ECM forests are not sufficient to assert that mycorrhizal types would determine the N transformation steps in soil, because soil physiochemistry, which strongly affects N transformation steps, differs between the forests. We used an aridity gradient with large differences in soil moisture, pH, and SOM quantity and quality, to distinguish the mycorrhizal and physicochemical effects on N transformation. Soil samples (0-10 cm depth) were collected from AM-symbiotic black locust forests under three aridity levels, and from ECM-symbiotic oak forests under two aridity levels. Soil physicochemical properties, extractable N dynamics and abundance, composition, and function of soil microbial communities were measured. In ECM forests, the ammonia-oxidizing prokaryotic abundance was low, whereas that of ECM fungi was high, resulting in lower nitrate N content than in AM forests. Since ECM forests did not have lower saprotrophic fungal abundance and prokaryotic decompositional activity than the AM forests, the hypothesis that ECM fungi could reduce SOM decay and ammonification by free-living microbes, might not hold in ECM forests. However, the limitation of ECM fungi on nitrate N production would result in a feedback that will accelerate plant dependence on these fungi, thereby raising soil C storage through an increase in the ECM biomass and plant C investment in soils.