The carbon (C) balance of permafrost regions is predicted to be extremely sensitive to climatic changes(1-3). Major uncertainties exist in the rate of permafrost thaw and associated C emissions (33-508 Pg C or 0.04-1.69 degrees C by 2100; refs 2,3) and plant C uptake. In the High Arctic, semi-deserts retain unique soil-plant-permafrost interactions(4,5) and heterogeneous soil C pools(6) (>12 Pg C; ref. 7). Owing to its coastal proximity, marked changes are expected for High Arctic tundra(8). With declining summer sea-ice cover(9), these systems are simultaneously exposed to rising temperatures(9), increases in precipitation(10) and permafrost degradation(11). Here we show, using measurements of tundra-atmosphere C fluxes and soil C sources (C-14) at a long-term climate change experiment in northwest Greenland, that warming decreased the summer CO2 sink strength of semi-deserts by up to 55%. In contrast, warming combined with wetting increased the CO2 sink strength by an order of magnitude. Further, wetting while relocating recently assimilated plant C into the deep soil decreased old C loss compared with the warming-only treatment. Consequently, the High Arctic has the potential to remain a strong C sink even as the rest of the permafrost region transitions to a net C source as a result of future global warming.