Phytoliths are microscopic particles of amorphous silica produced by plants that have vital importance for environmental change and carbon sequestration. This study investigated phytoliths and their morphotype assemblages, and phytolith-occluded carbon (PhytOC) along a marsh degradation gradient to clarify the significance of phytoliths for evaluating carbon sequestration dynamics during marsh degradation on the Zoige Plateau, China. Soil samples from non-degraded marsh (NDM), lightly degraded marsh (LDM), moderately degraded marsh (MDM), and seriously degraded marsh (SDM) were collected. Soil phytolith shape and PhytOC were determined using heavy liquid suspension, microscope observations, and alkali-solution spectrophotometry. The dominant phytolith morphotypes among the 15 identified in the soils from the differently degraded marshes were lanceolate, rectangular, and elongate, which originated from Poaceae and Cyperaceae. Soil phytolith morphotype assemblages show potential for studying past vegetation and climatic succession in alpine wetlands. The soil phytolith and PhytOC content exhibited no significant differences between the NDM and LDM samples. Compared with the NDM soil, phytolith content was significantly lower in the MDM (33.8–58.8%) and SDM (52.7–65.4%) soils, respectively, and PhytOC content was also significantly lower (by 31.0–57.1% and 47.5–74.4%, respectively). The soil phytolith and PhytOC content decreased significantly with soil depth, especially once the marsh has become moderately degraded. Alpine marsh degradation reduced the accumulation of soil PhytOC by decreasing the PhytOC input flux, thereby altering the long-term carbon sequestration mechanism of phytoliths in this alpine-marsh wetland ecosystem.