Global biodiversity loss has prompted research on the relationship between species diversity and ecosystem functioning. Few studies have examined how plant diversity impacts belowground processes; even fewer have examined how varying resource levels can influence the effect of plant diversity on microbial activity. In a field experiment in a restored wetland, we examined the role of plant trait diversity (or functional diversity, (FD)) and its interactions with natural levels of variability of soil properties, on a microbial process, denitrification potential (DNP). We demonstrated that FD significantly affected microbial DNP through its interactions with soil conditions; increasing FD led to increased DNP but mainly at higher levels of soil resources. Our results suggest that the effect of species diversity on ecosystem functioning may depend on environmental factors such as resource availability. Future biodiversity experiments should examine how natural levels of environmental variability impact the importance of biodiversity to ecosystem functioning.