In drylands worldwide, biological soil crusts (BSC) form a thin photosynthetic cover across landscapes, and provide vital benefits in terms of stabilizing soil and fixing nitrogen (N) and carbon (C). Numerous studies have examined the effects of climate and disturbance on BSC functions; however, few have characterized these responses in rolling BSCs typical of northern ecosystems in the Intermountain West, US. With temperature increases and shifts in precipitation projected, it is unclear how BSCs in this region will respond to climate change, and how the response could affect their capacity to perform key ecosystem functions, such as providing ‘new’ N through biological N₂ fixation. To address this important knowledge gap, we examined nitrogenase activity (NA) associated with rolling BSCs along a climatic gradient in southwestern Idaho, US, and quantified how acetylene reduction rates changed as a function of climate, grazing (using exclosures), and shrub-canopy association. Results show that warmer, drier climates at lower elevations hosted greater cover of late successional BSC communities (e.g., mosses and lichens), and higher NA compared with colder, wetter climates at higher elevations. Highest NA (0.5–29.3 µmol C₂H₄ m⁻² h⁻¹) occurred during the early summer/spring, when water was more available than in late summer/autumn. Activity was strongly associated with soil characteristics including pH and ammonium concentrations suggesting these characteristics as potentially strong controls on NA in BSCs. The relationship between grazing and NA varied with elevation. Specifically, lower elevation sites had lower NA at grazed locations, whereas higher elevation sites had higher NA with grazing. At both low and high ends of the elevation gradient, shrub-canopy associated BSCs maintained two to three times higher NA compared to BSCs in the interspace among shrubs. Taken together, our findings indicate that the controls and rates of NA in BSCs vary seasonally and strongly with climate in the Intermountain West, and that drier springs are likely to influence rates of NA more than warmer summers.