Magnetic properties of shallow (<10‐cm depth), fine‐grained surficial sediments contrast greatly with those of immediately underlying bedrock across much of the dry American Southwest. At 26 study sites in fine‐grained (<63 μm) surficial sediments isolated from alluvial inputs, isothermal remanent magnetization (IRM; mean of 67 samples = 6.72 × 10⁻³ Am² kg⁻¹) is more than two orders of magnitude greater than that for underlying Paleozoic and Mesozoic sedimentary rocks. This contrast is mainly caused by the presence of silt‐size, titanium‐bearing magnetite particles in the surficial deposits and their absence in bedrock. Because of their size, composition, and isolated location, the magnetite particles represent a component of atmospheric dust likely deposited over the past few centuries. The positive correlation of sediment‐IRM values with amounts of potential plant nutrients reveals the importance of atmospheric dust to soil fertility over much of the American Southwest. Subsequent disturbance of landscapes, by domestic livestock grazing as an example, commonly results in wind erosion, which then depletes exposed surfaces of original aeolian magnetite and associated fine‐grained sediment. Declines in soil fertility and water‐holding capacity in these settings can be estimated in some field settings via decreases in magnetic susceptibility, relative to nearby undisturbed areas. Along gentle hillslope gradients of the Colorado Plateau, field measures for aeolian magnetite demonstrate that the redistribution of deposited atmospheric dust influences landscape‐level patterns in the distribution of invasive exotic plant species. Our results indicate that environmental magnetism has high potential for assessing the development and degradation of dry landscapes elsewhere.