Nitrogen (N) and water availability are important factors affecting ecosystem productivity that can be influenced by land-use change. We hypothesized that the observed increase in carbon (C) sequestration associated with afforestation of semi-arid sparse shrubland must also be associated with an increase in N input. We tested this hypothesis by reconstructing the ecosystem N budget of two ecosystems, a semi-arid shrubland and a nearby planted pine forest, using measurements augmented with literature-based estimates. Our findings demonstrate that, contrary to our hypothesis, massive C sequestration by the pine forest could be accounted for without a change in the net N budget (i.e., neither elevated N inputs nor reduced N losses). However, in comparison to the shrubland, the forest showed an almost tripling in aboveground N use efficiency (NUE; 235 vs. 83 kg dry mass kg(-1) N) and a doubling in ecosystem level C/N ratio (16 vs. 8, for the forest and shrubland, respectively). Nitrogen cycling slowed in the forest compared to the shrubland: net N mineralization rates in soils decreased by approximately 50%, decomposition rates decreased by approximately 20%, and NO(x) loss decreased by approximately 64%. These adjustments in N cycling provide a possible basis for increased NUE and subsequent C sequestration without net change in the overall N budget, which should be addressed in future investigations.