Global temperatures are expected to increase by 1.1 to 6.4°C over the next century and, over the same period, nitrogen inputs to terrestrial ecosystems are expected to increase as a result of increased crop fertilisation and atmospheric nitrogen deposition. Both of these global change drivers are expected to affect net carbon balance by increasing both gross primary production and ecosystem respiration, yet the balance between these processes, and the potential interactive effects of the drivers, require quantification. The ability to accurately predict the effects of warming and nitrogen addition on all components of terrestrial carbon balance will be critical in determining the likely positive feedback to rising atmospheric CO₂ from terrestrial ecosystems. Tussock grasslands are a widespread and important carbon store within New Zealand and are representative of temperate grasslands worldwide. This thesis addresses the question: Will tussock grasslands act as a positive feedback to rising atmospheric CO₂ concentration in response to soil warming and nitrogen addition? Using a combination of controlled-environment and field-scale studies of tussock grassland, net ecosystem carbon exchange was partitioned into gross primary production, ecosystem respiration and the autotrophic and heterotrophic components of soil respiration. Soil respiration in the field increased by 41% in response to a 3°C soil warming treatment and by 12% in response to a 50 kg N ha⁻¹ y⁻¹ nitrogen addition treatment. Only warming resulted in enhanced heterotrophic decomposition of soil organic matter (37% increase). However, a controlled-environment study indicated that caution must be used when interpreting temperature responses of heterotrophic respiration from root-free soils, as priming effects were shown to decrease the sensitivity of heterotrophic respiration to temperature. Measurements of net ecosystem exchange in the field showed that warming-enhanced heterotrophic respiration lead to a significant 49 g m⁻² reduction in net ecosystem carbon uptake. Neither nitrogen addition nor combined warming and nitrogen addition treatment resulted in significant changes in net ecosystem carbon balance. These results suggest that tussock grasslands will act as a positive feedback to rising atmospheric CO₂ concentration. However, increased nitrogen deposition will serve as a potential mitigating factor for climate driven feedbacks.