Many arid and semiarid ecosystems have soils covered with well-developed biological soil crust communities (biocrusts) made up of mosses, lichens, cyanobacteria, and heterotrophs living at the soil surface. These communities are a fundamental component of dryland ecosystems, and are critical to dryland carbon (C) cycling. To examine the effects of warming temperatures on soil C balance in a dryland ecosystem, we used infrared heaters to warm biocrust-dominated soils to 2 °C above control conditions at a field site on the Colorado Plateau, USA. We monitored net soil exchange (NSE) of CO₂ every hour for 21 months using automated flux chambers (5 control and 5 warmed chambers), which included the CO₂ fluxes of the biocrusts and the soil beneath them. We observed measurable photosynthesis in biocrust soils on 12 % of measurement days, which correlated well with precipitation events and soil wet-up. These days included several snow events, providing what we believe to be the first evidence of substantial photosynthesis underneath snow by biocrust organisms in drylands. Overall, biocrust soils in both control and warmed plots were net CO₂ sources to the atmosphere, with control plots losing 62 ± 8 g C m⁻² (mean ± SE) over the first year of measurement and warmed plots losing 74 ± 9 g C m⁻². Between control and warmed plots, the difference in soil C loss was uncertain over the course of the entire year due to large and variable rates in spring, but on days during which soils were wet and crusts were actively photosynthesizing, biocrusts that were warmed by 2 °C had a substantially more negative C balance (i.e., biocrust soils took up less C and/or lost more C in warmed plots). Taken together, our data suggest a substantial risk of increased C loss from biocrust soils with higher future temperatures, and highlight a robust capacity to predict CO₂ exchange in biocrust soils using easily measured environmental parameters.