Nitrogen limits plant growth in almost all terrestrial ecosystems, even in low-precipitation ecosystems. Vegetation in arid ecosystems is usually composed of two dominant plant-functional types, grasses and shrubs, which have different rooting and water acquisition patterns. These plant-functional types may respond differently to N availability because they have different strategies to absorb and retranslocate N. We hypothesized that grasses are more N limited than shrubs, and consequently will show higher responses to N addition. To test this hypothesis, we added 50 kg N ha−1 year−1 as NH4NO3 during two years in the Patagonian steppe, Argentina, and we evaluated the responses of aboveground net primary production and N concentration of green leaves of the dominant grass and shrub species. Grass biomass significantly (P = 0.007) increased with increased N availability whereas shrub biomass did not change after two years of N addition. Shrubs have higher nitrogen concentration in green leaves than grasses, particularly the leguminous Adesmia volkmanni, and showed no response to N addition whereas foliar N concentration of grasses significantly increased with N fertilization (P < 0.05). Grasses may have a larger response to increase N availability than shrubs because they have a more open N economy absorbing up to 30% of their annual requirement from the soil. In contrast, shrubs have a closer N cycle, absorbing between 7 and 16% of their annual N requirement from the soil. Consequently shrubs depend less on soil N availability and are less responsive to increases in soil N.