Annual precipitation in the central and southern warm-desert region of North America is distributed climatologically between summer and winter periods with two prominent dry periods between them. We used energy and carbon dioxide (CO2) fluxes from eddy covariance along with standard meteorological and soil moisture measurements at a semiarid savanna in southern Arizona, United States, to better understand the consequences of warm or cool season drought on ecosystem CO2 exchange in these bimodally forced water-limited regions. Over the last 100 years, this historic grassland has converted to a savanna by the encroachment of the native mesquite tree (Prosopis velutina Woot.). During each of the 4 years of observation (2004–2007), annual precipitation (P) was below average, but monsoon (July–September) P was both above and below average while cool-season (December–March) P was always less than average by varying degrees. The ecosystem was a net source of CO2 to the atmosphere, ranging from 14 to 95 g C m−2 yr−1 with the strength of the source increasing with decreasing precipitation. When the rainfall was closest to the long-term average in its distribution and amount, the ecosystem was essentially carbon neutral. Summer drought resulted in increased carbon losses due mainly to a shortening of the growing season and the length of time later in the season when photosynthetic gain exceeds respiration loss. Severe cool season drought led to decreased spring carbon uptake and seemingly enhanced summer respiration, resulting in conditions that led to the greatest annual net carbon loss.