Commercial forest plantations need to be actively managed, through tree removal, in order to improve wood quality, maintain productivity and provide an economic return, although this could compromise an important role for forests in carbon sequestration and greenhouse gas mitigation. The impact of forest thinning on net primary productivity (NPP) and net ecosystem exchange (NEE) was assessed using a combination of biometric and eddy covariance (EC) techniques. Two thinning operations were performed in close succession, which reduced the basal area of the stand by 17% and 11% and removed a timber volume of 48m3ha−1 and 50m3ha−1, respectively. Annual rates of NPP ranged from 13.24 (±3.96) to 18.94 (±4.88)tCha−1 and 13.22 (±3.72) to 17.77 (±5.30)tCha−1 for the pre- and post-thinning periods, respectively. Estimates of NEE varied between 8.44 (±1.34) to 8.87 (±1.48)tCha−1 and 6.75 (±1.19) to 10.33 (±1.41)tCha−1 in the pre- and post-thinning periods. Forest thinning did not have a significant impact on carbon stocks or fluxes when pre-thinning (2002–2006) and post-thinning (2007–2009) estimates of NPP and NEE were compared, however the range of inter-annual variability in NEE increased after thinning. The partitioning of annual NEE carbon budgets into gross primary productivity (GPP) and ecosystem respiration (Reco) together with an analysis of key physiological parameters suggested that the impacts of forest thinning are largely dependent on temperature. An expected decrease in GPP after the initial thinning in 2007 was not observed due, in part, to the higher mean annual air temperatures and incident photosynthetic active radiation (PAR) and a compensatory increase in photosynthesis by the remaining trees. A continual decline in Reco, was observed in the years subsequent to the first thinning and was attributed to both biomass removal and climatic factors.Inter-annual variations in climate had a significant impact on NEE, GPP and Reco. Annual mean air temperature, total precipitation and total incident PAR were all shown to influence the processes driving CO2 exchange. Overall, these results suggest that the impacts of the thinning practices, as implemented in this study, are dependent on climate and under similar conditions are unlikely, in the short-term, to compromise a role for forest ecosystems in carbon sequestration and greenhouse gas mitigation.