This study was designed to identify potential effects of elevated CO2 on belowground respiration (the sum of root and heterotrophic respiration) in field and microcosm ecosystems and on the annual carbon budget. We made three sets of respiration measurements in two CO2 treatments, i.e., (1) monthly in the sandstone grassland and in microcosms from November 1993 to June 1994; (2) at the annual peak of live biomass (March and April) in the serpentine and sandstone grasslands in 1993 and 1994; and (3) at peak biomass in the microcosms with monocultures of seven species in 1993. To help understand ecosystem carbon cycling, we also made supplementary measurements of belowground respiration monthly in sandstone and serpentine grasslands located within 500 m of the CO2 experiment site. The seasonal average respiration rate in the sandstone grassland was 2.12 μmol m-2 s-1 in elevated CO2, which was 42% higher than the 1.49 μmol m-2 s-1 measured in ambient CO2 (P=0.007). Studies of seven individual species in the microcosms indicated that respiration was positively correlated with plant biomass and increased, on average, by 70% with CO2. Monthly measurements revealed a strong seasonality in belowground respiration, being low (0-0.5 μmol CO2 m-2 s-1 in the two grasslands adjacent to the CO2 site) in the summer dry season and high (2-4 μmol CO2 m-2 s-1 in the sandstone grassland and 2-7 μmol CO2 m-2 s-1 in the microcosms) during the growing season from the onset of fall rains in November to early spring in April and May. Estimated annual carbon effluxes from the soil were 323 and 440 g C m-2 year-1 for the sandstone grasslands in ambient and elevated CO2. That CO2-stimulated increase in annual soil carbon efflux is more than twice as big as the increase in aboveground net primary productivity (NPPa) and approximately 60% of NPPa in this grassland in the current CO2 environment. The results of this study suggest that below-ground respiration can dissipate most of the increase in photosynthesis stimulated by elevated CO2.