Soil moisture is a major driver of microbial activity and thus, of the release of carbon (C) into the Earth's atmosphere. Yet, there is no consensus on the relationship between soil moisture and microbial respiration, and as a result, moisture response functions are a poorly constrained aspect of C models. In addition, models assume that the response of microbial respiration to moisture is the same for all ecosystems, regardless of climate history, an assumption that many empirical studies have challenged. These gaps in understanding of the microbial respiration response to moisture contribute to uncertainty in model predictions. We review our understanding of what drives microbial moisture response, highlighting evidence that historical precipitation can influence both responses to moisture and sensitivity to drought. We present two hypotheses, the ‘climate history hypothesis’, where we predict that baseline moisture response functions change as a function of precipitation history, and the ‘drought legacy hypothesis’, in which we suggest that the intensity and frequency of historical drought have shaped microbial communities in ways that will control moisture responses to contemporary drought. Underlying mechanisms include biological selection and filtering of the microbial community by rainfall regimes, which result in microbial traits and trade-offs that shape function. We present an integrated modelling and empirical approach for understanding microbial moisture responses and improving models. Standardized measures of moisture response (respiration rate across a range of moistures) and accompanying microbial properties are needed across sites. These data can be incorporated into trait-based models to produce generalized moisture response functions, which can then be validated and incorporated into conventional and microbially explicit ecosystem models of soil C cycling. Future studies should strive to analyse realistic moisture conditions and consider the role of environmental factors and soil structure in microbial response. Microbes are the engines that drive C storage and are sensitive to changes in rainfall. A greater understanding of the factors that govern this sensitivity could be a key part of improving predictions of soil C dynamics, climate change and C-climate feedbacks. Read the free Plain Language Summary for this article on the Journal blog.