AbstractClimate change impacts are not uniform across the Arctic region because interacting factors causes large variations in local ecosystem change. Extreme climatic events and population cycles of herbivores occur simultaneously against a background of gradual climate warming trends and can redirect ecosystem change along routes that are difficult to predict. Here, we present the results from sub‐Arctic heath vegetation and its belowground micro‐arthropod community in response to the two main drivers of vegetation damage in this region: extreme winter warming events and subsequent outbreaks of the defoliating autumnal moth caterpillar (Epirrita autumnata). Evergreen dwarf shrub biomass decreased (30%) following extreme winter warming events and again by moth caterpillar grazing. Deciduous shrubs that were previously exposed to an extreme winter warming event were not affected by the moth caterpillar grazing, while those that were not exposed to warming events (control plots) showed reduced (23%) biomass from grazing. Cryptogam cover increased irrespective of grazing or winter warming events. Micro‐arthropods declined (46%) following winter warming but did not respond to changes in plant community. Extreme winter warming and caterpillar grazing suppressed the CO2 fluxes of the ecosystem. Evergreen dwarf shrubs are disadvantaged in a future sub‐Arctic with more stochastic climatic and biotic events. Given that summer warming may further benefit deciduous over evergreen shrubs, event and trend climate change may both act against evergreen shrubs and the ecosystem functions they provide. This is of particular concern given that Arctic heath vegetation is typically dominated by evergreen shrubs. Other components of the vegetation showed variable responses to abiotic and biotic events, and their interaction indicates that sub‐Arctic vegetation response to multiple pressures is not easy to predict from single‐factor responses. Therefore, while biotic and climatic events may have clear impacts, more work is needed to understand their net effect on Arctic ecosystems.