Increased plant productivity under elevated atmospheric CO2 concentrations might increase soil carbon (C) inputs and storage, which would constitute an important negative feedback on the ongoing atmospheric CO2 rise. However, elevated CO2 often also leads to increased soil moisture, which could accelerate the decomposition of soil organic matter, thus counteracting the positive effects via C cycling. We investigated soil C sequestration responses to 5 years of elevated CO2 treatment in a temperate spring wheat agroecosystem. The application of 13C-depleted CO2 to the elevated CO2 plots enabled us to partition soil C into recently fixed C (Cnew) and pre-experimental C (Cold) by 13C/12C mass balance. Gross C inputs to soils associated with Cnew accumulation and the decomposition of Cold were then simulated using the Rothamsted C model ‘RothC.’ We also ran simulations with a modified RothC version that was driven directly by measured soil moisture and temperature data instead of the original water balance equation that required potential evaporation and precipitation as input. The model accurately reproduced the measured Cnew in bulk soil and microbial biomass C. Assuming equal soil moisture in both ambient and elevated CO2, simulation results indicated that elevated CO2 soils accumulated an extra ∼40–50 g C m−2 relative to ambient CO2 soils over the 5 year treatment period. However, when accounting for the increased soil moisture under elevated CO2 that we observed, a faster decomposition of Cold resulted; this extra C loss under elevated CO2 resulted in a negative net effect on total soil C of ∼30 g C m−2 relative to ambient conditions. The present study therefore demonstrates that positive effects of elevated CO2 on soil C due to extra soil C inputs can be more than compensated by negative effects of elevated CO2 via the hydrological cycle.