Worldwide, seagrass meadows accumulate significant stocks of organic carbon (C), known as “blue” carbon, which can remain buried for decades to centuries. However, when seagrass meadows are disturbed, these C stocks may be remineralized, leading to significant CO2 emissions. Increasing ocean temperatures, and increasing frequency and severity of heat waves, threaten seagrass meadows and their sediment blue C. To date, no study has directly measured the impact of seagrass declines from high temperatures on sediment C stocks. Here, we use a long-term record of sediment C stocks from a 7-km2, restored eelgrass (Zostera marina) meadow to show that seagrass dieback following a single marine heat wave (MHW) led to significant losses of sediment C. Patterns of sediment C loss and re-accumulation lagged patterns of seagrass recovery. Sediment C losses were concentrated within the central area of the meadow, where sites experienced extreme shoot density declines of 90% during the MHW and net losses of 20% of sediment C over the following 3 years. However, this effect was not uniform; outer meadow sites showed little evidence of shoot declines during the MHW and had net increases of 60% of sediment C over the following 3 years. Overall, sites with higher seagrass recovery maintained 1.7x as much C compared to sites with lower recovery. Our study demonstrates that while seagrass blue C is vulnerable to MHWs, localization of seagrass loss can prevent meadow-wide C losses. Long-term (decadal and beyond) stability of seagrass blue C depends on seagrass resilience to short-term disturbance events.