In areas where higher plant cover is restricted, such as in cold and hot deserts, photosynthetically-driven microbial communities known as biological soil crusts (BSC) cover much of the topsoils, influencing the soil's hydrology, erodibility and biogeochemical exchanges with the atmosphere. These cm-thin microbial communities become important players in C and N cycling through biological fixation during pulses of water availability. We have conducted studies of C & N cycling in aridlands of the Colorado Plateau, at the sub-cm scale at which microbial cycling occurs within these communities, using microsensor chemical profiling and molecular techniques. We could demonstrate the presence of incomplete C & N cycling due to the formation of extensive anoxic niches, and the surprising lack of denitrifyers. These studies predict that BSC act as net exporters of much of the N fixed to the bulk soil, through percolation or runoff, in the from of stoichiometrically similar amounts of ammonium and nitrate. Scale-up macroscopic incubation experiments of crusted soil cores using piston flow were consistent with this prediction, and in addition detected an additional export pool of organic N. The results are discussed in light of the value of BSC for arid- and rangeland fertility, as well as with respect to the recently discovered deep ground water N-reservoirs of arid lands.