Disturbances alter ecosystem carbon dynamics, often by reducing carbon uptake and stocks. We compared the impact of two types of disturbances that represent the most likely future conditions of currently dense ponderosa pine forests of the southwestern United States: (1) high-intensity fire and (2) thinning, designed to reduce fire intensity. High-severity fire had a larger impact on ecosystem carbon uptake and storage than thinning. Total ecosystem carbon was 42% lower at the intensely burned site, 10 years after burning, than at the undisturbed site. Eddy covariance measurements over two years showed that the burned site was a net annual source of carbon to the atmosphere whereas the undisturbed site was a sink. Net primary production (NPP), evapotranspiration (ET), and water use efficiency were lower at the burned site than at the undisturbed site. In contrast, thinning decreased total ecosystem carbon by 18%, and changed the site from a carbon sink to a source in the first post-treatment year. Thinning also decreased ET, reduced the limitation of drought on carbon uptake during summer, and did not change water use efficiency. Both disturbances reduced ecosystem carbon uptake by decreasing gross primary production (55% by burning, 30% by thinning) more than total ecosystem respiration (TER; 33–47% by burning, 18% by thinning), and increased the contribution of soil carbon dioxide efflux to TER. The relationship between TER and temperature was not affected by either disturbance. Efforts to accurately estimate regional carbon budgets should consider impacts on carbon dynamics of both large disturbances, such as high-intensity fire, and the partial disturbance of thinning that is often used to prevent intense burning. Our results show that thinned forests of ponderosa pine in the southwestern United States are a desirable alternative to intensively burned forests to maintain carbon stocks and primary production.