Global temperature increases and precipitation changes are both expected to alter ecosystem carbon (C) cycling. We tested responses of ecosystem C cycling to simulated climate change using field manipulations of temperature and precipitation across a range of grass-dominated ecosystems along an elevation gradient in northern Arizona. In 2002, we transplanted intact plant–soil mesocosms to simulate warming and used passive interceptors and collectors to manipulate precipitation. We measured daytime ecosystem respiration (ER) and net ecosystem C exchange throughout the growing season in 2008 and 2009. Warming generally stimulated ER and photosynthesis, but had variable effects on daytime net C exchange. Increased precipitation stimulated ecosystem C cycling only in the driest ecosystem at the lowest elevation, whereas decreased precipitation showed no effects on ecosystem C cycling across all ecosystems. No significant interaction between temperature and precipitation treatments was observed. Structural equation modeling revealed that in the wetter-than-average year of 2008, changes in ecosystem C cycling were more strongly affected by warming-induced reduction in soil moisture than by altered precipitation. In contrast, during the drier year of 2009, warming induced increase in soil temperature rather than changes in soil moisture determined ecosystem C cycling. Our findings suggest that warming exerted the strongest influence on ecosystem C cycling in both years, by modulating soil moisture in the wet year and soil temperature in the dry year.