Aims Shrub encroachment has profound influences on regional carbon cycling. However, few studies have examined the changes in soil organic carbon (SOC) components at the molecular level along a climate gradient. In this study, we aimed to investigate the effects of biotic and abiotic factors on the patterns of SOC components in the shrub patches and the grassy matrix. Methods We analyzed the distribution and controlling factors of SOC components (including free lipids, bound lipids, and lignin-derived phenols) in the topsoil of shrub-encroached grasslands along natural climate gradients in Inner Mongolia, China. Results We found that the concentrations of bound lipids and lignin-derived phenols were significantly higher and the vanillic acid to vanillin ratio ((Ad/Al)(v)) was significantly lower in the shrub patches than in the grassy matrix (p < 0.05). After excluding variables exhibiting collinearity, redundancy analysis showed that shrub patch cover and soil pH were the most important variables that influenced SOC composition in the shrub patches, while herb characteristics and shrub density were the most important in the grassy matrix. Structural equation modeling showed that shrub characteristics at the plot scale greatly contributed to the variance in all components in the grassy matrix, whereas soil properties were more important in the shrub patches. Conclusions Our results highlight that although the topsoil carbon content did not change, shrub encroachment altered the SOC components and their drivers in the Inner Mongolian grasslands.