Applications of compost and clay to ameliorate soil constraints such as water stress are potential management strategies for sandy agricultural soils. Water repellent sandy soils in rain-fed agricultural systems limit production and have negative environmental effects associated with leaching and soil erosion. The aim was to determine whether compost and clay amendments in a sandy agricultural soil influenced the rhizosphere microbiome of Trifolium subterraneum under differing water regimes. Soil was amended with compost (2% w/w), clay (5% w/w) and a combination of both, in a glasshouse experiment with well-watered and water-stressed (70 and 35% field capacity) treatments. Ion Torrent 16S rRNA sequencing and Phylogenetic Investigation of Communities by Reconstruction of Unobserved States (PICRUSt) analysis of functional gene prediction were used to characterise the rhizosphere bacterial community and its functional component involved in nitrogen (N) cycling and soil carbon (C) degradation. Compost soil treatments increased the relative abundance of copiotrophic bacteria, decreased labile C and increased the abundance of recalcitrant C degrading genes. Predicted N cycling genes increased with the addition of clay (N2 fixation, nitrification, denitrification) and compost + clay (N2 fixation, denitrification) and decreased with compost (for denitrification) amendment. Water stress did not alter the relative abundance of phylum level taxa in the presence of compost, although copiotrophic Actinobacteria increased in relative abundance with addition of clay and with compost + clay. A significant role of compost and clay under water stress in influencing the composition of rhizosphere bacteria and their implications for N cycling and C degradation was demonstrated.