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Increased carbon storage in ecosystems due to elevated CO2 may help stabilize atmospheric CO2 concentrations and slow global warming. Many field studies have found that elevated CO2 leads to higher carbon assimilation by plants, and others suggest that this can lead to higher carbon storage in soils, the largest and most stable terrestrial carbon pool. Here we show that 6 years of experimental CO2 doubling reduced soil carbon in a scrub-oak ecosystem despite higher plant growth, offsetting 52% of the additional carbon that had accumulated at elevated CO2 in aboveground and coarse root biomass. The decline in soil carbon was driven by changes in soil microbial composition and activity. Soils exposed to elevated CO2 had higher relative abundances of fungi and higher activities of a soil carbon-degrading enzyme, which led to more rapid rates of soil organic matter degradation than soils exposed to ambient CO2. The isotopic composition of microbial fatty acids confirmed that elevated CO2 increased microbial utilization of soil organic matter. These results show how elevated CO2, by altering soil microbial communities, can cause a potential carbon sink to become a carbon source.