Alpine wetlands on the Qinghai-Tibet Plateau are degrading, threatening soil nutrient cycles. In a three-year Gahai Wetland, we built a nitrogen cycling functional potential index to measure how soil nitrogen cycle enzymes respond to degradation levels. Rather than simply slowing nitrogen cycling, soil drying and carbon loss reorganized the functional potentials of different enzyme pathways, alongside yearly rainfall shifts. These insights will help guide wetland restoration in a drier climate.