Dormancy is a bet-hedging strategy used by a variety of organisms to overcome unfavorable environmental conditions. By entering a reversible state of low metabolic activity, dormant individuals become members of a seed bank, which can determine community dynamics in future generations. Although microbiologists have documented dormancy in both clinical and natural settings, the importance of seed banks for the diversity and functioning of microbial communities remains untested. Here, we develop a theoretical model demonstrating that microbial communities are structured by environmental cues that trigger dormancy. A molecular survey of lake ecosystems revealed that dormancy plays a more important role in shaping bacterial communities than eukaryotic microbial communities. The proportion of dormant bacteria was relatively low in productive ecosystems but accounted for up to 40% of taxon richness in nutrient-poor systems. Our simulations and empirical data suggest that regional environmental cues and dormancy synchronize the composition of active communities across the landscape while decoupling active microbes from the total community at local scales. Furthermore, we observed that rare bacterial taxa were disproportionately active relative to common bacterial taxa, suggesting that microbial rank-abundance curves are more dynamic than previously considered. We propose that repeated transitions to and from the seed bank may help maintain the high levels of microbial biodiversity that are observed in nearly all ecosystems.