AbstractDespite its pivotal feedback to carbon cycling, representing the dynamic response of vegetation to nitrogen limitation is a key challenge for simulating the terrestrial carbon sink with land models. Here, we explore a representation of this dynamic response of vegetation to nitrogen limitation with a novel representation of biological nitrogen fixation and nitrogen cycling in the Canadian Land Surface Scheme Including Biogeochemical Cycles. First, we assess how incorporating the dynamic response of vegetation to nitrogen limitation via biological nitrogen fixation influences the response to CO2 and nitrogen fertilization experiments, comparing simulations against observation‐based estimates from meta‐analyses. This evaluates whether the underlying mechanisms are realistically represented. Second, we assess how incorporating the dynamic response of vegetation to nitrogen limitation via biological nitrogen fixation affects simulated terrestrial carbon sequestration over the 20th and early 21st century, examining the effects of global change drivers (CO2, nitrogen deposition, climate, and land‐use change) acting both individually and concurrently. Including nitrogen cycling reduces the terrestrial carbon sink driven by elevated CO2 over the historical period. Representing the dynamic response of vegetation to nitrogen limitation via biological nitrogen fixation increases the estimate of the present‐day terrestrial carbon sink by 0.2 Pg C yr−1 (because elevated CO2 intensifies nitrogen limitation, which drives the upregulation of biological nitrogen fixation, alleviating nitrogen limitation). Our results highlight the importance of the dynamic response of vegetation to nitrogen limitation for realistically projecting the future terrestrial carbon sink under global change with land models.