Abstract As climate cooling is increasingly regarded as important natural variability of long-term global warming trends, there is a resurging interest in understanding its impact on biodiversity and ecosystem functioning. Here, we report a soil transplant experiment from lower to higher elevations in a Tibetan alpine grassland to simulate the impact of cooling on ecosystem community structure and function. Three years of cooling resulted in reduced plant productivity and microbial functional potential (for example, carbon respiration and nutrient cycling). Microbial genetic markers associated with chemically recalcitrant carbon decomposition remained unchanged despite a decrease in genes associated with chemically labile carbon decomposition. As a consequence, cooling-associated changes correlated with a decrease in soil organic carbon (SOC). Extrapolation of these results suggests that for every 1 °C decrease in annual average air temperature, 0.1 Pg (0.3%) of SOC would be lost from the Tibetan plateau. These results demonstrate that microbial feedbacks to cooling have the potential to differentially impact chemically labile and recalcitrant carbon turnover, which could lead to strong, adverse consequences on soil C storage. Our findings are alarming, considering the frequency of short-term cooling and its scale to disrupt ecosystems and biogeochemical cycling.