The net ecosystem CO2 exchange (NEE) of a 28–30 m tall transitional (ecotonal) tropical forest of the Brazilian Amazon was quantified using tower-based eddy covariance. Measurements were made between August 1999 and July 2001 and were used to develop nonlinear statistical models to assess daily variations in ecophysiological parameters and provide annual estimates of NEE, gross ecosystem CO2exchange (GEE), and respiration (Re). Diurnal trends in NEE were correlated with variations in photosynthetic photon flux density (Q), vapor pressure deficit (V), and temperature. Seasonal trends in the CO2-flux components estimated from nonlinear regression (Amax and R0) were highly correlated with soil water availability and canopy structural properties (LAI and litter production). These results suggest that variations in soil water content can affect rates of canopy photosynthesis and whole forest respiration by altering both physiological processes and canopy structural properties. Estimates of the annual NEE suggest that the forest was in balance with respect to CO2 during the study period, which, in terms of rainfall, was a relatively typical period compared to the 30-yr average rainfall regime. Our results also suggest that the warmer and dryer microclimate and decline in LAI that accompany land-cover change will cause transitional forests to be sources of CO2 to the atmosphere.