Climate change has increased the frequency and intensity of droughts, with potential impacts on carbon (C) release from soil (i.e. soil respiration, Rs). Although numerous studies have investigated drought-induced changes in Rs, how roots and the soil microbial community regulate responses of Rs to drought remains unclear. We conducted a 4-year field experiment (2014–2017) with three treatments (i.e. 70% rainfall reduction, control and ambient) in a subtropical forest to examine effects of drought on Rs and its components [i.e. autotrophic (Ra) and heterotrophic respiration (Rh)] and explore the mechanisms underlying these effects. Drought significantly decreased Rs by 17% averaged over the 4 years, but it had no significant effect in the first experimental year. The decrease in Rs was mediated by soil fungi and fine root biomass. Fine root biomass was correlated negatively with Ra and Rs under drought, but positively in the control treatment. Furthermore, drought treatments increased physiological stress in the bacterial community. Structural equation model (SEM) analysis suggested that under drought conditions, microclimate affected Rs via its impact on fine root biomass and fungal biomass. Our results highlight the complex interactions between microclimate, roots and soil microbes in regulating Rs under drought in subtropical forest ecosystems. Incorporating these interactions into land surface models may improve predictions of climate change impacts on forest ecosystems. A free Plain Language Summary can be found within the Supporting Information of this article.