Wet grasslands in the Brazilian Cerrado occupy around 1 % of the Cerrado extension, acting as ecotones connecting well-drained savanna vegetation and gallery forest. Wet grasslands help maintain biodiversity and water balance, and are an important component of the carbon (C) balance, storing an average of 241 MgC h(-1) in the top 60 cm soils. However, in addition to increased climactic variability, Brazilian wet grasslands are under pressure from domestic water use and agricultural irrigation. Here, we present 2 years of carbon balance data from a Brazilian wet grassland, which was exposed to below average seasonal and annual precipitation during the first year and excess precipitation during the second year. We used the eddy covariance approach to measure net ecosystem carbon exchange (NEE) and ecosystem respiration (R (e)). Results indicated that the wet grassland was a carbon sink during both years, taking up similar amounts each year (-86.5 gC m(-2) year(-1) in 2005 and -81.3 gC m(-2) year(-1) in 2006). However, seasonal NEE was variable and driven by fluctuations in the water table depth (P < 0.05), shifting the balance from a carbon sink to a carbon source from 1 month to the next by as much as 50 gC m(-2) when water table dropped below 20 cm depth. The gross ecosystem carbon uptake (GEE) decreased with water table depth, while R-e increased due to the exposure of old organic carbon to microbial decomposition. Results indicated that a prolonged drought, which is probable under future projected climatic variability, could lead the ecosystem to be a carbon source and highlight the importance of management strategy in preserving soil water in these ecosystems.