Conversion of pastures to plantation forests has been proposed as a means to increase rates of carbon (C) sequestration from the atmosphere thereby reducing net greenhouse gas emissions from human activities. However, several studies have indicated that soil C stocks decrease after planting conifer (mainly pine) trees into pasture. This loss of soil C detracts from the role that plantation forests can play in net C sequestration. Here, we used a paired site (a grazed native pasture with the C 4 grass Themeda triandra dominant, and an adjacent 16-year-old Pinus radiata plantation) to compare all C and nitrogen (N) pools (including soil, litter on the floor, below-ground and above-ground biomass) in the two ecosystems and to estimate the rate of C sequestration after the land use change from the native pasture to the pine plantation. Soil C and N stocks from soil surface down to 1m under the pine plantation were significantly less than under the native pasture by 20% (57.3MgCha −1 vs. 71.6MgCha −1 ) and 15% (5.6MgNha −1 vs. 6.7MgNha −1 ), respectively. Much more C and N was stored in litter on the floor in the pine plantation than in the native pasture (8.0MgCha −1 vs. 0.03MgCha −1 , and 119.0kgNha −1 vs. 0.9kgNha −1 ), and in biomass (95.0MgCha −1 vs. 2.5MgCha −1 and 411.5kgNha −1 vs. 62.8kgNha −1 ). Carbon stored in coarse tree roots was alone sufficient to compensate the C loss from soil after the land use change. Much more C and N was deposited annually to above-ground litter in the pine plantation than in the native pasture (2.18MgCha −1 year −1 vs. 0.22MgCha −1 year −1 , and 32.8kgNha −1 year −1 vs. 5.9kgNha −1 year −1 ), but less to below-ground litter (through fine root death) (2.71MgCha −1 year −1 vs. 3.57MgCha −1 year −1 and 38.9kgNha −1 year −1 vs. 81.4kgNha −1 year −1 ). The shift in net primary production from below-ground dominance to above-ground dominance after planting trees onto the pasture, and the slower turnover of litter in the plantation, played a key role in the reduction in soil C in the plantation ecosystem. In conclusion, planting pine trees onto a native temperate Australian pasture sequestered a significant amount of C (net 86MgCha −1 , averaging 5.4MgCha −1 year −1 ) from the atmosphere in 16 years despite the loss of 14MgCha −1 from the soil organic matter.