The study was conducted during the growing seasons of 2013, 2014, and 2015 in the wet meadows on the eastern Qinghai–Tibet plateau (QTP) in the Gansu Gahai Wetland Nature Reserve to determine the dynamics of soil organic carbon (SOC) as affected by vegetation degradation along a moisture gradient and to assess its relationship with other soil properties and biomass yield. Hence, we measured SOC at depths of 0–10, 10–20, and 20–40 cm under the influence of four categories of vegetation degradation (healthy vegetation [HV], slightly degraded [SD], moderately degraded [MD], and heavily degraded [HD]). Our results showed that SOC decreased with increased degree of vegetation degradation. Average SOC content ranged between 36.18 ± 4.06 g/kg in HD and 69.86 ± 21.78 g/kg in HV. Compared with HV, SOC content reduced by 30.49%, 42.22%, and 48.22% in SD, MD, and HD, respectively. SOC significantly correlated positively with soil water content, aboveground biomass, and belowground biomass, but significantly correlated negatively with soil temperature and bulk density (p < 0.05). Highly Significant positive correlations were also found between SOC and total nitrogen (p = 0.0036), total phosphorus (p = 0.0006) and total potassium (p < 0.0001). Our study suggests that severe vegetation and moisture loss led to approximately 50% loss in SOC content in the wet meadows, implying that under climate warming, vegetation and soil moisture loss will dramatically destabilize carbon sink capacities of wetlands. We therefore suggest wetland hydrological management, restoration of vegetation, plant species protection, regulation of grazing activities, and other anthropogenic activities to stabilize carbon sink capacities of wetlands.