Assessing soil microbial functionality has the potential to reveal meaningful effects of soil management on soil processes influencing soil quality. We used MicroResp™ to assess microbial respiration upon the addition of six carbon substrates (glucose, alanine, aminobutyric acid, N-acetyl glucosamine, alpha-ketoglutaric acid, and lignin). From this, we calculated the multiple substrate induced respiration (MSIR), the microbial catabolic profile expressed as absolute and relative utilization rate, and the Shannon microbial functional diversity index (H′). We tested the effect of tillage (reduced vs. conventional) and organic matter addition (high vs. low) on these microbial parameters in soil from 10 European long-term field experiments (LTEs), and investigated their relationships with labile organic carbon fractions and various soil parameters linked to soil functions. Reduced tillage and high organic matter input increased MSIR compared to conventional tillage and low organic matter input. In addition, reduced tillage resulted in a small but significant increase in functional diversity compared to conventional tillage. An increase in soil management intensity (CT-Low > CT-High > RT-Low > RT-High) was associated with lower utilization of all the substrates expressed as absolute utilization rate, and a proportionately higher utilization of alpha-ketoglutaric acid compared to the other substrates. More intensive management systems also showed lower soil quality as measured by various soil parameters, in particular total and labile organic carbon, basal respiration, and microbial biomass nitrogen. The present work shows for the first time the key role of labile organic carbon, as affected by soil management, in determining microbial functional diversity. Aggregating results from 10 European arable LTEs, making use of a comprehensive dataset, MicroResp™ showed that reduced tillage and increased organic matter addition created a more favourable habitat for the microbial community to utilize different carbon substrates and, thereby, the potential for nutrient cycling.