We examined the effect of nitrogen and water addition on soil carbon pool dynamics in a semi-arid grassland field experiment. Soils were sampled over a four-year period at different soil depths and analyzed for total soil organic carbon (SOC), oxidizable C (OxC), lignin and total nitrogen (TN) in bulk soil and the silt and clay fraction (< 53 mu m). We found that water but not N addition increased SOC (by 18.1%), OxC (by 12.2%), and TN (by 15.1%) in bulk soil. In contrast, SOC, OxC, and TN in the silt and clay fraction showed no change in response to both N and water addition. Both N and water addition showed no effect on total lignin concentration in soils. A more enriched C-13 and lower C:N ratio in the silt and clay fraction indicated enhanced microbially processed C of relatively greater stability in this fraction compared to the bulk soil. Water addition promoted soil C sequestration by enhancing C input from plant materials as evidenced from more depleted soil delta C-13 compared to the ambient precipitation. We suggest that the increase in OxC was likely one of the main drivers of the larger SOC concentration with higher water inputs. Soil C fractions in subsoils were also affected by exogenous resource inputs in a similar way as surface soils. Future modeling work on soil C sequestration should consider the relative contribution of OxC and mineral-associated C to SOC changes.