High-latitude ecosystems store large amounts of carbon (C); however, the C storage of these ecosystems is under threat from both climate warming and increased levels of herbivory. In this study we examined the combined role of herbivores and climate warming as drivers of CO2 fluxes in two typical high-latitude habitats (mesic heath and wet meadow). We hypothesized that both herbivory and climate warming would reduce the C sink strength of Arctic tundra through their combined effects on plant biomass and gross ecosystem photosynthesis and on decomposition rates and the abiotic environment. To test this hypothesis we employed experimental warming (via International Tundra Experiment [ITEX] chambers) and grazing (via captive Barnacle Geese) in a three-year factorial field experiment. Ecosystem CO2 fluxes (net ecosystem exchange of CO2, ecosystem respiration, and gross ecosystem photosynthesis) were measured in all treatments at varying intensity over the three growing seasons to capture the impact of the treatments on a range of temporal scales (diurnal, seasonal, and interannual). Grazing and warming treatments had markedly different effects on CO2 fluxes in the two tundra habitats. Grazing caused a strong reduction in CO2 assimilation in the wet meadow, while warming reduced CO2 efflux from the mesic heath. Treatment effects on net ecosystem exchange largely derived from the modification of gross ecosystem photosynthesis rather than ecosystem respiration. In this study we have demonstrated that on the habitat scale, grazing by geese is a strong driver of net ecosystem exchange of CO2, with the potential to reduce the CO2 sink strength of Arctic ecosystems. Our results highlight that the large reduction in plant biomass due to goose grazing in the Arctic noted in several studies can alter the C balance of wet tundra ecosystems. We conclude that herbivory will modulate direct climate warming responses of Arctic tundra with implications for the ecosystem C balance; however, the magnitude and direction of the response will be habitat-specific.