Perennial shrub-annual plant interactions play key roles in desert regions influencing the structure and dynamics of plant communities there. In the present study, carried out in northwestern Saudi Arabia, we examined the effect of Haloxylon salicornicum shrubs on their associated understory annual species across four consecutive growing seasons, along with a record of the seasonal rainfall patterns. We measured density and species richness of all the annual species in permanent quadrats located beneath individual shrubs, as well as in the spaces between shrubs. During wet growing season H. salicornicum shrubs significantly enhanced the density and species richness of sub-canopy species, whereas in the relatively dry seasons they exerted negative effects on the associated species. In all growing seasons, the presence of shrubs was associated with enhanced soil properties, including increased organic carbon content, silt + clay, and levels of nutrients (N, P and K). Shrubs improved soil moisture content beneath their canopies in the wet growing season, while in the dry seasons they had negative effects on water availability. Differences in effects of H. salicornicum on understory plants between growing seasons seem due to the temporal changes in the impact of shrubs on water availability. Our results suggest the facilitative effects of shrubs on sub-canopy annuals in arid ecosystems may switch to negative effects with increasing drought stress. We discuss the study in light of recent refinements of the well-known “stress-gradient hypothesis”.