AbstractExtreme climatic events are among the drivers of recent declines in plant biomass and productivity observed across Arctic ecosystems, known as “Arctic browning.” These events can cause landscape‐scale vegetation damage and so are likely to have major impacts on ecosystem CO2 balance. However, there is little understanding of the impacts on CO2 fluxes, especially across the growing season. Furthermore, while widespread shoot mortality is commonly observed with browning events, recent observations show that shoot stress responses are also common, and manifest as high levels of persistent anthocyanin pigmentation. Whether or how this response impacts ecosystem CO2 fluxes is not known. To address these research needs, a growing season assessment of browning impacts following frost drought and extreme winter warming (both extreme climatic events) on the key ecosystem CO2 fluxes Net Ecosystem Exchange (NEE), Gross Primary Productivity (GPP), ecosystem respiration (Reco) and soil respiration (Rsoil) was carried out in widespread sub‐Arctic dwarf shrub heathland, incorporating both mortality and stress responses. Browning (mortality and stress responses combined) caused considerable site‐level reductions in GPP and NEE (of up to 44%), with greatest impacts occurring at early and late season. Furthermore, impacts on CO2 fluxes associated with stress often equalled or exceeded those resulting from vegetation mortality. This demonstrates that extreme events can have major impacts on ecosystem CO2 balance, considerably reducing the carbon sink capacity of the ecosystem, even where vegetation is not killed. Structural Equation Modelling and additional measurements, including decomposition rates and leaf respiration, provided further insight into mechanisms underlying impacts of mortality and stress on CO2 fluxes. The scale of reductions in ecosystem CO2 uptake highlights the need for a process‐based understanding of Arctic browning in order to predict how vegetation and CO2 balance will respond to continuing climate change.