The ongoing expansion of shrub cover in response to climate change represents a unique opportunity to explore the link between soil microbial communities and vegetation changes. This link is particularly important in peatlands where shrub expansion is expected to feed back negatively on the carbon sink capacity of these ecosystems. Microbial community structure and function were measured seasonally in four peatlands located along an altitude gradient representing a natural gradient of climate and associated vascular plant abundance. We show that increased soil temperature and reduced water content are associated with greater vascular plant biomass, in particular that of ericoids, and that this, in turn, is correlated with greater microbial biomass. More specifically, microbial community structure is characterized by an increasing dominance of fungi over bacteria with improved soil oxygenation. We also found that the carbon and nitrogen stoichiometry of microbial biomass differs in relation to soil microbial community structure and that this is ultimately associated with a different investment in extracellular enzymatic activity. Our findings highlight the fact that the determination of the structural identity of microbial communities can help to explain the biogeochemical dynamics of organic matter and provide a better understanding of ecosystem response to environmental changes.