Context Habitat fragmentation is known to be one of the leading causes of species extinctions, however few studies have explored how habitat fragmentation impacts ecosystem functioning and carbon cycling, especially in wetland ecosystems. Objectives We aimed to determine how habitat fragmentation, defined by habitat area and distance from habitat edge, impacts the above-ground carbon cycling and nutrient stoichiometry of a foundation species in a coastal salt marsh. Methods We conducted our research in a salt marsh in the Mid-Atlantic United States, where the foundation grass species Spartina patens is being replaced by a more flood-tolerant grass, leading to highly fragmented habitat patches. We quantified decomposition rates, live biomass, and litter accumulation of S. patens at patch edges and interiors. Additionally, we measured relevant characteristics (e.g., habitat area, elevation, microclimate) of S. patens patches. Results Habitat edge effects, and not habitat area effects, had distinct impacts on ecosystem functioning. Habitat edges had less litter accumulation, faster decomposition rates, a warmer and drier microclimate, and lower elevations than patch interiors. Patches with low elevation edges had the fastest decomposition rates, while interiors of patches at any elevation had the slowest decomposition rates. Notably, these impacts were not driven by changes in primary production. Conclusion Habitat fragmentation impacts the above-ground carbon cycling of S. patens in coastal wetlands by altering litter decomposition, but not primary production, through habitat edge effects. Future research should investigate whether this pattern scales across broader landscapes and if it is observable in other wetland ecosystems.