Rising temperatures can influence ecosystem processes both directly and indirectly, through effects on plant species and communities. An improved understanding of direct versus indirect effects of warming on ecosystem processes is needed for robust predictions of the impacts of climate change on terrestrial ecosystem carbon (C) dynamics.To explore potential direct and indirect effects of warming on C dynamics in arctic tundra heath, we established a warming (open top chambers) and dominant plant species (Empetrum hermaphroditum Hagerup) removal experiment at a high and low elevation site. We measured the individual and interactive effects of warming, dominant species removal and elevation on plant species cover, the normalized difference vegetation index (NDVI), leaf area index (LAI), temperature, soil moisture and instantaneous net ecosystem CO2 exchange.We hypothesized that ecosystems would be stronger CO2 sinks at the low elevation site, and that warming and species removal would weaken the CO2 sink because warming should increase ecosystem respiration (ER) and species removal should reduce gross primary productivity (GPP). Furthermore, we hypothesized that warming and species removal would have the greatest impact on processes at the high elevation where site temperature should be most limiting and dominant species may buffer the overall community to environmental stress more compared to the low elevation site where plants are more likely to compete with the dominant species.The instantaneous CO2 flux, which reflected a weak CO2 sink, was similar at both elevations. Neither experimental warming nor dominant species removal significantly changed GPP or instantaneous net ecosystem CO2 exchange even though species removal significantly reduced ER, NDVI and LAI.Our results show that even the loss of dominant plant species may not result in significant landscape‐scale responses of net ecosystem CO2 exchange to warming. They also show that NDVI and LAI may be limited in their ability to predict changes in GPP in these tundra heaths systems. Our study highlights the need for more detailed vegetation analyses and ground‐truthed measurements in order to accurately predict direct and indirect impacts of climatic change on ecosystem C dynamics.