Global warming coupled with increased drought is predicted to have a significant negative impact on desert ecosystems. In arid desert regions, a large proportion of the ground surface is covered by specialized organisms such as mosses and lichens that form biocrusts, which play a vital role in ecosystems. However, the long-term effects of warming and drought on these key biotic components of desert ecosystems remain poorly understood. Using a manipulative experiment conducted for 12 years in the Tengger Desert, northwestern China, we evaluated how both mosses and lichens in biocrust communities responded to 0.5°C and 1.5°C increases in temperature coupled with 5% and 8% reductions in total annual precipitation, respectively, using two groups of open-top chambers to approximate climate change conditions that are predicted to occur in this study region. Furthermore, surface soil carbon uptake by the biocrusts was also evaluated. Twelve years of warming coupled with increased drought resulted in a significant decrease in the cover and biomass of mosses but did not change the cover or biomass of lichens. These changes in the mosses were positively correlated with the duration and intensity of the treatments. Warming coupled with reduced precipitation significantly reduced the carbon uptake of the moss-dominated biocrusts by reducing the availability of moisture content. However, lichen carbon uptake was insensitive to the warming and reduced precipitation treatments. The reduction in cover and biomass of moss-dominated biocrusts might be attributed to large amounts of carbon loss, which further alters biocrust multifunctionality in desert ecosystems. In addition, our findings suggest that coupled warming and drought conditions could increase the dominance of lichens in biocrust communities to partly maintain the multifunctionality of biocrusts in this desert ecosystem.