Shrub encroachment is a world-wide ecological phenomenon which is associated with abrupt transition from grassland to shrubland. Such a change of vegetation cover has the potential of impacting the local and regional climate and may contribute to further shift in vegetation cover in many ecosystems. It has been recently proposed that such a vegetation-microclimate feedback may exist in the southwestern U.S. deserts, in which a cold sensitive shrub species, Larrea tridentata, could be favored by the feedback. This dissertation uses both observational and numerical modeling approaches to investigate the interaction between shrub encroachment and microclimate in the northern Chihuahuan desert, and to assess the role of the vegetation-microclimate feedback in favoring further shrub encroachment. In particular, field observations reveal that the shrubland has a significantly higher nighttime temperature (of about 2K on average) than the adjacent grassland, demonstrating the effect of different vegetation covers on local microclimate. Such a temperature difference only extends to a low height level (<20m above around), which establishes itself shortly after sunset and then persists throughout the night. The observed warmer nocturnal condition over the shrubland is interpreted as the consequence of the increased bare soil fraction caused by shrub encroachment: the less insulated ground surface enhances the diurnal soil heating and the nocturnal release of longwave radiation, which results in a higher nighttime temperature. Such a shrubinduced warming is found to be overall important, because it is comparable to a regional climate warming over a timescale of one century. To better understand the underlying shrubs. This can induce bi-stability to the shrubland-grassland system in extreme cold winters, and contribute to further the shrub encroachment.iii ACKNOWLEDGEMENTS