Soils are the largest terrestrial carbon store and soil respiration is the second-largest flux in ecosystem carbon cycling. Across China's temperate region, climatic changes and human activities have frequently caused the transformation of grasslands to woodlands. However, the effect of this transition on soil respiration and soil organic carbon (SOC) dynamics remains uncertain in this area. In this study, we measured in situ soil respiration and SOC storage over a two-year period (Jan. 2007–Dec. 2008) from five characteristic vegetation types in a forest-steppe ecotone of temperate China, including grassland (GR), shrubland (SH), as well as in evergreen coniferous (EC), deciduous coniferous (DC) and deciduous broadleaved forest (DB), to evaluate the changes of soil respiration and SOC storage with grassland conversions to diverse types of woodlands. Annual soil respiration increased by 3%, 6%, 14%, and 22% after the conversion from GR to EC, SH, DC, and DB, respectively. The variation in soil respiration among different vegetation types could be well explained by SOC and soil total nitrogen content. Despite higher soil respiration in woodlands, SOC storage and residence time increased in the upper 20 cm of soil. Our results suggest that the differences in soil environmental conditions, especially soil substrate availability, influenced the level of annual soil respiration produced by different vegetation types. Moreover, shifts from grassland to woody plant dominance resulted in increased SOC storage. Given the widespread increase in woody plant abundance caused by climate change and large-scale afforestation programs, the soils are expected to accumulate and store increased amounts of organic carbon in temperate areas of China.