AbstractQuestionWhat is the effect of long‐term grazing and no grazing (NG) on carbon dioxide flux and soil carbon storage in Icelandic semi‐natural grasslands.LocationThree farms, with known history of land use, in W Iceland.MethodsOn each farm, we located an intensively and an extensively grazed site, which both had been constantly grazed for centuries, and a parallel site with no grazing for over 50 years. We measured net ecosystem exchange (NEE), ecosystem respiration and normalized difference vegetation index on a regular basis over the growing season. Samples were taken from 60 cm deep soil profiles for analysis of soil organic carbon (SOC).ResultsThe grazed sites showed significantly more negative NEE than the NG sites, indicating more carbon dioxide uptake on the grazed sites compared to the NG sites. The normalized difference vegetation index was also significantly higher on the grazed sites. On all farms, the total SOC content was higher in the grazed sites than in the parallel NG sites.ConclusionsThe study indicates that cessation of grazing decreases productivity and carbon dioxide uptake in a semi‐natural grassland in Iceland, as well as SOC content in the soil. Historically, all the NG sites in the study had the same grazing history as the continuously grazed sites until grazing exclusion. The measured lower SOC on the NG sites seems to indicate that, without grazing, SOC is lost with time and/or grazing is needed to maintain SOC in these grasslands.