Soil nematodes are capable of employing an anhydrobiotic survival strategy in response to adverse environmental conditions. The McMurdo Dry Valleys of Antarctica represent a unique environment for the study of anhydrobiosis because extremes of cold, salinity, and aridity combine to limit biological water availability. We studied nematode anhydrobiosis in Taylor Valley, Antarctica, using natural variation in soil properties. The coiled morphology of nematodes extracted from dry valley soils suggests that they employ anhydrobiosis, and these coiled nematodes showed enhanced revival when re-hydrated in water as compared to vermiform nematodes. Nematode coiling was correlated with soil moisture content, salinity, and water potential. In the driest soils studied (gravimetric water content <2%), 20–80% of nematodes were coiled. Soil water potential measurements also showed a high degree of variability. These measurements reflect microsite variation in soil properties that occurs at the scale of the nematode. We studied nematode anhydrobiosis during the austral summer, and found that the proportion of nematodes coiled can vary diurnally, with more nematodes vermiform and presumably active at the warmest time of day. However, dry valley nematodes uncoiled rapidly in response to soil wetting from snowmelt, and most nematode activity in the Dry Valleys may be confined to periods following rare snowfall and melting events. Anhydrobiosis represents an important temporal component of a dry valley nematode's life span. The ability to utilize anhydrobiosis plays a significant role in the widespread distribution and success of these organisms in the Antarctic Dry Valleys and beyond.