Atmospheric carbon dioxide enrichment (eCO2) can enhance plant carbon uptake and growth1,2,3,4,5, thereby providing an important negative feedback to climate change by slowing the rate of increase of the atmospheric CO2 concentration6. Although evidence gathered from young aggrading forests has generally indicated a strong CO2 fertilization effect on biomass growth3,4,5, it is unclear whether mature forests respond to eCO2 in a similar way. In mature trees and forest stands7,8,9,10, photosynthetic uptake has been found to increase under eCO2 without any apparent accompanying growth response, leaving the fate of additional carbon fixed under eCO2 unclear4,5,7,8,9,10,11. Here using data from the first ecosystem-scale Free-Air CO2 Enrichment (FACE) experiment in a mature forest, we constructed a comprehensive ecosystem carbon budget to track the fate of carbon as the forest responded to four years of eCO2 exposure. We show that, although the eCO2 treatment of +150 parts per million (+38 per cent) above ambient levels induced a 12 per cent (+247 grams of carbon per square metre per year) increase in carbon uptake through gross primary production, this additional carbon uptake did not lead to increased carbon sequestration at the ecosystem level. Instead, the majority of the extra carbon was emitted back into the atmosphere via several respiratory fluxes, with increased soil respiration alone accounting for half of the total uptake surplus. Our results call into question the predominant thinking that the capacity of forests to act as carbon sinks will be generally enhanced under eCO2, and challenge the efficacy of climate mitigation strategies that rely on ubiquitous CO2 fertilization as a driver of increased carbon sinks in global forests.