Non-native invasive plants can promote their dominance in novel ecosystems by accelerating soil nutrient cycling via interactions with decomposer microbes. Changes in abiotic conditions associated with frequent or prolonged drought may disrupt these interactions, but the effects of disruption on invasive plant performance and the underpinning mechanisms are poorly understood. Here, we used rainout shelters in an experimental field setting to test the hypothesis that drought reduces invasive plant performance by reducing microbial metabolic activity, resulting in decreased nitrogen flow to plants. We imposed growing season drought on populations of the exotic grass Microstegium vimineum, a widespread invasive plant in eastern deciduous forests, and quantified effects on aboveground and belowground biomass, and carbon (C) and nitrogen (N) cycling among plants, decomposers, and soil. Drought resulted in a 24% decrease in soil respiration, a 16% decrease in phenol oxidase enzyme activity, a 12% decrease in dissolved organic N concentration, and a decrease in the C:N ratio of particulate organic matter, suggesting reduced microbial metabolic activity and nutrient mining of soil organic matter. Drought also reduced aboveground Microstegium biomass 33% and increased Microstegium leaf C:N ratio, consistent with a decline in plant N uptake. We conclude that drought can reduce the performance of existing invasive species populations by suppressing plant–microbe interactions that increase nitrogen supply to plants, which may have consequences for the persistence of invasive plants under hydrologic change.