Soil warming has the potential to alter both soil and plant processes that affect carbon storage in forest ecosystems. We have quantified these effects in a large, long-term (seven-year) soil warming study in a deciduous forest in New England, USA. Warming stimulated the decomposition of soil organic matter and the loss of soil carbon as carbon dioxide to the atmosphere. Soil organic matter decay also released inorganic nitrogen into soil solution that led to increased plant productivity and carbon storage in woody tissues. While soil warming has resulted in a cumulative net loss of carbon from a New England forest relative to a control area over the seven-year study, the annual losses generally decreased over time as plant carbon storage increased. In the seventh year, soil carbon losses were almost totally compensated for by plant carbon gains in the warmed area. We attribute the plant gains primarily to warming-induced increased nitrogen availability. This study underscores the importance of incorporating carbon-nitrogen interactions in coupled earth system models to accurately simulate land feedbacks to the climate system.