Several studies on the environmental impacts of livestock enterprises are based on the application of life cycle assessments (LCA). In Alpine regions, soil carbon sequestration can play an important role in reducing environmental impacts. However, there is no official methodology to calculate this possible reduction. Biodiversity plays an important role in the Alpine environment and is affected by human activities, such as cattle farming. Our aim was to estimate the carbon footprint (CF) of four different dairy production systems (different in breeds and feeding intensity) by using the LCA approach. The present study included 44 dairy Alpine farms located in the autonomous province of Bolzano in northern Italy. Half of the farms (n = 22) kept Alpine Grey and the other half (n = 22) Brown Swiss cattle. Within breeds, the farms were divided by the amount of concentrated feed per cow and day into high concentrate (HC) and low concentrate (LC). This resulted in 11 Alpine Grey low concentrate (AGLC) farms feeding an average amount of 3.0 kg concentrated feed/cow/day and 11 Alpine Grey high concentrate (AGHC) farms with an average amount of 6.3 kg concentrated feed/cow/day. Eleven farms kept Brown Swiss cows with an average amount of 3.7 kg concentrated feed/cow/day (BSLC) and another 11 farms feeding on average 7.6 kg concentrated feed/cow/day (BSHC). CF for the four systems was estimated using the LCA approach. The functional unit was 1 kg of fat and protein corrected milk (FPCM). Furthermore, two methodologies have been applied to estimate soil carbon sequestration and effect on biodiversity. The system with the lowest environmental impact in terms of CF was BSHC (1.14 kg CO2-eq/kg of FPCM), while the most impactful system was the AGLC group (1.55 kg CO2-eq/kg of FPCM). Including the CF reduction due to soil carbon sequestered from grassland, it decreased differently for the two applied methods. For all four systems, the main factor for CF was enteric emission, while the main pollutant was biogenic CH4. Conversely, AGLC had the lowest impact when the damage to biodiversity was considered (damage score = 0.41/kg of FPCM, damage to ecosystem diversity = 1.78 E-07 species*yr/kg FPCM). In comparison, BSHC had the greatest impact in terms of damage to biodiversity (damage score = 0.56/kg of FPCM, damage to ecosystem diversity = 2.49 E-07 species*yr/kg FPCM). This study indicates the importance of including soil carbon sequestration from grasslands and effects on biodiversity when calculating the environmental performance of dairy farms.