Desert phreatophytic communities are increasingly experiencing hydrologic change due to redistribution of water resources. Water exports have been occurring in Owens Valley, California for almost a century, leading to questions about possible interactions between groundwater availability and community composition. While many studies of vegetation change in Owens Valley have focused on depth to groundwater as the primary factor influencing competitive interactions among grasses and shrubs, nutrient relations may also play an important role in mediating changes in plant cover and composition. We evaluated differences in water sources of grass and shrub species in Owens Valley with measurements of the isotopic composition of root, stem, soil, and groundwater. We also measured leaf nitrogen and soil carbon, nitrogen, and inorganic N availability to determine if differential access to water sources was associated with distinct patterns of N relations in grasses versus shrubs. We found that grasses accessed isotopically enriched water sources in the shallow surface soil early and late in the season while shrubs utilized groundwater throughout the growing season. However, despite access to different water sources, leaf N was similar in grasses and the shrub species Ericameria nauseosa. In contrast, the halophytic shrub species Atriplex torreyi consistently showed high leaf N that was isotopically enriched relative to the other species. Soil nitrogen was highly isotopically enriched in the surface soil, suggesting that Atriplex accessed pools of enriched N in the shallow soil to a greater extent than other species. There was a strong, consistent relationship between leaf C:N and leaf nitrogen isotopes across six species and 11 sites sampled throughout Owens Valley. These results suggest that access to isotopically enriched N is a strong control on N uptake in these highly N limited ecosystems, and that N relations as well as water relations play an important role in phreatophytic community composition.