The Qinghai-Tibetan Plateau is the highest plateau in the world. Covered mainly by alpine grasslands, the plateau plays an important role in the region's carbon budget. The plateau is characterized by high irradiance, low atmospheric pressure, and low temperature. To examine the carbon dynamics of grassland ecosystems on the plateau, we developed a new model, the carbon dynamics model for alpine grasslands (CDMag). CDMag is composed of a gross photosynthesis (Ac) submodel including photoinhibition simulation, an ecosystem respiration (ER) submodel that considers both autotrophic and heterotrophic respiration, and an intercellular CO2 partial pressure and canopy conductance submodel. The photoinhibition simulation is included to describe the gross production of alpine ecosystems in response to the high-irradiance environment. A multilayered irradiance transfer scheme is adopted to estimate the irradiance on sunlit and shaded leaves within grassy canopies, and a coupled canopy conductance–net photosynthesis function is integrated into the Ac submodel. CDMag was used to simulate the carbon dynamics of the most extensively distributed alpine grassland, a Kobresia meadow ecosystem on the Qinghai-Tibetan Plateau. CDMag reproduces well the diurnal and seasonal variation of net ecosystem exchange (NEE) and nighttime ER based on data obtained from 2001 to 2003 using the eddy-covariance method. The mean measured NEE was about 1.62 μmol m−2 s−1 for the measured periods of the 3 years; the mean of the deviations between measured and simulated NEE was −0.16 to 0.33 μmol m−2 s−1. Owing to photoinhibition, daily gross photosynthesis lost about 5.3–5.6%. The losses were mainly contributed by the 7.5–7.8% reduction in Ac of sunlit leaves of the upper canopy layer. In addition, the light-use efficiency of the alpine meadow had seasonal dynamics, with the highest values in the middle of the growing season. We have generalized CDMag for other alpine grasslands on the entire plateau.