The Arctic-Boreal Zone (ABZ) is rapidly warming, impacting its large soil carbon stocks. We use a new compilation of terrestrial ecosystem CO2 fluxes, geospatial datasets and random forest models to show that although the ABZ was an increasing terrestrial CO2 sink from 2001 to 2020 (mean +/- standard deviation in net ecosystem exchange: -548 +/- 140 Tg C yr-1; trend: -14 Tg C yr-1, p<0.001), more than 30% of the region was a net CO2 source. Tundra regions may have already started to function on average as CO2 sources, demonstrating a critical shift in carbon dynamics. After factoring in fire emissions, the increasing ABZ sink was no longer statistically significant (budget: -319 +/- 140 Tg C yr-1; trend: -9 Tg C yr-1), with the permafrost region becoming CO2 neutral (budget: -24 +/- 123 Tg C yr-1; trend: -3 Tg C yr-1), underscoring the importance of fire in this region.