Decomposition of large ungulate herbivore dung and its subsequent incorporation into the soil play key roles in carbon and nutrient cycling and are important for grassland productivity. Dung beetles contribute to the initial breakdown and transport of organic matter from the dung into the soil but how they interact with the microbial community to modify decomposition processes remains poorly understood.Using a mesocosm experiment, we investigated the individual and interactive effect of two dung beetle species with contrasting functional behaviour (dweller species: Agrilinus ater (De Geer 1774) vs. tunneler species: Typhaeus typhoeus (Linneaus 1758)) on dung C cycling (CO2 fluxes and C transfer through the soil profile) and resultant effects on microbial activity and biomass in the soil.Both dung beetle species contributed significantly to dung removal, reducing the C lost through microbial respiration from the whole mesocosm. However, C concentrations measured in leachates from the mesocosm were only significantly higher in the presence of the tunneler species, indicating that tunnelling activity was required to increase C transfer down the soil profile. The combined effect of the two dung beetle species resulted in the highest soil microbial respiration from the soil and in particular in the 2–10 cm depth increment, suggesting positive complementarity effects between species with different functional behaviour.We conclude that the return of C in the form of dung in grasslands, coupled with the activity of a functionally diverse dung beetle assemblage, could result in short term fluctuations in soil microbial activity with important consequences for soil C cycling.