The continuous rise in global warming and dramatic changes in precipitation patterns have resulted in frequent extreme weather events, biodiversity loss, and ecosystem degradation. This has resulted in varying degrees of mortality in desert mosses, a ground cover type that maintains desert stability and provides important ecological functions. There is, however, a lack of research on the effects of moss mortality on soil multifunctionality (SMF) and microbial interactions in temperate deserts. This study compared and analyzed the soil nutrient content, enzyme activities, and the associated microbial community structure between living and dead moss crusts in the temperate Gurbantunggut Desert. The results indicated that moss mortality improved SMF by increasing the soil carbon content, nitrogen, phosphorus, and enzymatic activity. However, the mortality also considerably reduced the total biomass and abundance of bacteria and fungi in the topsoil, having no significant effect on their diversity. Additionally, a significant decrease in the connectivity and complexity of the soil bacterial and fungal networks was observed when compared to living moss crusts. This was especially noted in the fungal networks, where fungi were more sensitive than bacteria to moss mortality. Although the natural mortality of mosses increases SMF, there is also an increased risk of nutrient loss, thereby threatening ecosystem sustainability. It is, therefore, imperative to consider the causes of crustal degradation while developing management and restoration processes for degraded desert ecosystems.