We evaluated the impact of 7 years of grazing exclusion on vegetation and belowground properties related to soil carbon (C) and nitrogen (N) cycling in grazed, upland grassland in northern England. For this, we compared a landscape-level, moorland restoration project (grazing exclusion) with adjacent continuously grazed acidic grasslands to test whether changes in vegetation composition after restoration impacted on soil properties including soil C storage. Grazing exclusion significantly increased the proportion of dwarf-shrubs at the expense of graminoids. Despite high seasonal variability, this change in vegetation was associated with increased plant litter mass, soil moisture content and the ratio of dissolved organic to inorganic N, and reductions in rates of ammonium mineralisation, soil microbial activity, and microbial biomass N. Our observations suggest that grazing-exclusion as a restoration tool for upland habitats results in a slowing down of rates of C and N cycling. However, as yet, this has had no detectable impact on total C and N stocks in surface soil. Whereas increases in soil C and N stocks might be expected in the longer term, our results suggest that a certain level of grazing is compatible with the provision of ecosystem services such as soil C storage under traditional upland farming practices. © 2012 Elsevier B.V.