Technical Abstract: Encroachment of woody shrubs into historic desert grasslands is a major problem throughout the world. Conversion of grasslands to shrub-dominated systems may result in significant alteration of biogeochemical processes and reduced resource availability in shrub interspaces, making grassland recovery difficult. Soil petrocalcic horizons, which are common in arid and semiarid regions globally, have been shown to dramatically alter plant water availability. To assess how soil water dynamics are affected by woody encroachment in petrocalcic soils under contrasting precipitation patterns, we conducted a three year replicated study in a mixed shrub-grass system measuring soil water in unvegetated interspaces and under mesquite canopies. Plots were instrumented with TDR moisture probes, both above and within the soil petrocalcic horizon. Soils in both vegetation strata maintained large increases in available water content for several months during a wetter than normal winter and summer (increases of 0.08 to 0.16 m3 m-3). Interspace soils absorbed significantly greater quantities of water during the winter and retained more water into the spring than soils under shrubs. In contrast, soils under shrubs initially absorbed greater volumes of water during and following summer rains. Differing seasonal dynamics were attributed to interactions between the unique properties of soils with petrocalcic horizons and canopy induced variability in evapotranspiration. Observed patterns of plant available water do not support the hypothesis of greater resource availability under shrubs. Similar or greater water availability in shrub interspaces indicates that concentration of soil water under shrubs may not be a process limiting grass recovery on these soils.