Rapid warming is expected to increase plant growth in the Arctic(1), and result in trees gradually colonizing tundra(2). Models predict that enhanced carbon (C) storage in plant biomass may help offset atmospheric CO2 increases and reduce rates of climate change(2-4). However, in some Arctic ecosystems, high plant productivity is associated with rapid cycling and low storage of soil C (refs 1,5,6); thus, as plant growth increases, soil C may be lost through enhanced decomposition. Here we show that, in northern Sweden, total ecosystem C storage is greater in tundra heath (owing to greater soil C stocks) than in more productive mountain-birch forest. Furthermore, we demonstrate that in the forest, high plant activity during the middle of the growing season stimulates the decomposition of older soil organic matter. Such a response, referred to as positive priming, helps explain the low soil C storage in the forest when compared with the tundra. We suggest that, as more productive forest communities colonize tundra, the decomposition of the large C stocks in tundra soils could be stimulated. Thus, counter-intuitively, increased plant growth in the European Arctic could result in C being released to the atmosphere, accelerating climate change.