Shifts in the carbon balance of high-latitude ecosystems could result from differential responses of vegetation and soil processes to changing moisture and temperature regimes and to a lengthening of the growing season. Although shrub expansion and northward movement of treeline should increase carbon inputs, the effects of these vegetation changes on net carbon exchange have not been evaluated. We selected low shrub, tall shrub, and forest tundra sites near treeline in northwestern Alaska, representing the major structural transitions expected in response to warming. In these sites, we measured aboveground net primary production (ANPP) and vegetation and soil carbon and nitrogen pools, and used these data to parameterize the Terrestrial Ecosystem Model. We simulated the response of carbon balance components to air temperature and precipitation trends during 1981-2000. In areas experiencing warmer and dryer conditions, Net Primary Production (NPP) decreased and heterotrophic respiration (R H ) increased, leading to a decrease in Net Ecosystem Production (NEP). In warmer and wetter conditions NPP increased, but the response was exceeded by an increase in R H ; therefore, NEP also decreased. Lastly, in colder and wetter regions, the increase in NPP exceeded a small decline in R H , leading to an increase in NEP. The net effect for the region was a slight gain in ecosystem carbon storage over the 20 year period. This research highlights the potential importance of spatial variability in ecosystem responses to climate change in assessing the response of carbon storage in northern Alaska over the last two decades. ?? Springer 2005.