Our goal was to evaluate effects of broad-scale changes in vegetation from grasslands to shrublands over the past 150 years on near-surface atmosphere over the Jornada Experimental Range in the northern Chihuahuan Desert, using a regional climate model. Simulations were conducted using 1858 and 1998 vegetation maps, and data collected in the field. Overall, the vegetation shift led to small changes in sensible heat (SH) and an increase in latent heat (LH). The impacts of shrub encroachment depended on shrubland type: conversion from grass to mesquite cools the near-surface atmosphere and from grass to creosotebush warms it. Higher albedo of mesquite relative to grasses reduced available energy, which was dissipated mainly as LH due to the deeper root system in mesquite. In creosotebush-dominated areas, a decrease in albedo, an increase in roughness length and displacement height contributed to the SH increase and warmer temperatures. Sensitivity simulations showed that an increase in soil moisture content enhanced shrub LH and a reduction in mesquite cover enhanced the temperature differences. The observed shift in vegetation led to complex interactions between land and surface fluxes, demonstrating that vegetation itself is a weather and climate variable as it significantly influences temperature and humidity.