Natural moisture limitation during summer drought can constitute a stress for microbial communities in soil. Given globally predicted increases in drought frequency, there is an urgent need for a greater understanding of the effects of drought events on soil microbial processes. Using a long-term field-scale drought manipulation experiment at Clocaenog, Wales, UK, we analysed fungal community dynamics, using internal transcribed spacer-denaturing gradient gel electrophoresis (DGGE), over a 1-year period in the 6th year of drought manipulation. Ambient seasonality was found to be the dominant factor driving variation in fungal community dynamics. The summer drought manipulation resulted in a significant decline in the abundance of dominant fungal species, both independently of, and in interaction with, this seasonal variation. Furthermore, soil moisture was significantly correlated with the changes in fungal diversity over the drought manipulation period. While the relationship between species diversity and functional diversity remains equivocal, phenol oxidase activity was decreased by the summer drought conditions and there was a significant correlation with the decline of DGGE band richness among the most dominant fungal species during the drought season. Climatically driven events such as droughts may have significant implications for fungal community diversity and therefore, have the potential to interfere with crucial ecosystem processes, such as organic matter decomposition.