Drought would significantly influence the forest soils through changing the litterfall production and decomposition process. However, comprehensive in situ studies on drought effects in subtropical forests, especially in bamboo forests, have rarely been conducted. Here, we conducted a throughfall exclusion experiment with a rainfall reduction of ~80% in moso bamboo (Phyllostachys edulis) forests to investigate effects of drought on litter quantity, quality, soil microbial and enzyme activities, and soil nutrients across two years in subtropical China. We observed that throughfall exclusion (TE) treatment significantly decreased soil moisture by 63% compared to ambient control treatment (CK). Drought significantly decreased the annual litterfall in the second treatment year, and the leaf litter decomposition rate (-30% relative to CK) over 2 years of decomposition. TE treatment significantly decreased net release rate of litter carbon (C) and the amount of litter nitrogen (N) immobilization during a 360-day decomposition period, leading an increased litter C: N ratio in TE compared to CK. There was a distinct difference in soil microbial community composition between TE and CK treatments, showing higher bacteria biomass in TE but no difference in fungal biomass between TE and CK. Structural equation modelling revealed that drought decreased the contribution of litter quantity to soil nutrients but increased that of litter quality and soil microbial community to soil nutrients. Our results suggest that increasing drought events in subtropical China will directly reduce litterfall quantity and quality on the one hand, and alter the soil enzyme activities and microbial composition on the other hand, all of which will consequently decrease litter decomposition rate, soil nutrient availability, growth rate and productivity, leading to changes in the functioning and services of subtropical bamboo forests.