Northern peatlands are recognized as globally important stores of terrestrial carbon (C), yet we have limited understanding of how global changes, including land use, affect C cycling processes in these ecosystems. Making use of a long-term (>50 year old) peatland land management experiment in the UK, we investigated, using a 13CO2 pulse chase approach, how managed burning and grazing influenced the short-term uptake and cycling of C through the plant-soil system. We found that burning affected the composition and growth stage of the plant community, by substantially reducing the abundance of mature ericoid dwarf-shrubs. Burning also affected the structure of the soil microbial community, measured using phospholipid fatty acid analysis, by reducing fungal biomass. There was no difference in net ecosystem exchange of CO2, but burning was associated with an increase in photosynthetic uptake of 13CO2 and increased transfer of 13C to the soil microbial community relative to unburned areas. In contrast, grazing had no detectable effects on any measured C cycling process. Our study provides new insight into how changes in vegetation and soil microbial communities arising from managed burning affect peatland C cycling processes, by enhancing the uptake of photosynthetic C and the transfer of C belowground, whilst maintaining net ecosystem exchange of CO2 at pre-burn levels. © 2012 Springer Science+Business Media, LLC.