Grasslands across the globe account for approximately 34% of terrestrial carbon stores. Increases in temperature and decreases in soil moisture have the potential to turn these carbon sinks into sources, further driving climate change. However, the effects of these climatic factors are largely unknown for Australia’s sub-alpine grasslands. Here, we conducted a global systematic review and meta-analysis to understand the effects of combined warming and drought in situ on grassland carbon dynamics. We complemented this with our own field experiment in Kosciuszko National Park to test the effects of a future climate on a sub-alpine grassland through a long term in situ experiment that factorially elevated temperatures and reduced precipitation, simulating future drought conditions (2070-2100). The soil profile was warmed with soil heating rods while rain-out shelters were used to reduce incident precipitation. We measured CO₂ efflux using a closed path chamber system as well as above and belowground biomass. Results from the field experiment suggest that drought caused significant declines in soil respiration while there was evidence of acclimation to warming treatments. Soil moisture, more so than temperature, is likely the dominant driver of soil respiration with seasonal drying affecting all treatments. Aboveground biomass appears largely unchanged while heat and drought in combination may be driving an increase in belowground biomass. The results of this study will have relevance to understanding the carbon dynamics of Australia’s alpine grasslands and can be used to draw comparisons with grasslands globally.