Significant changes in ecosystem CO2 exchange and vegetation characteristics were observed following multiple additions of nitrogen (N) and factorial additions of N and phosphorus (P) to prostrate dwarf-shrub, herb tundra in Northwest Greenland. Ecosystem CO2 exchange and vegetation cover and composition were very sensitive to low rates of N inputs (0.5 g m−2 y−1), indicating that even low rates of atmospheric N deposition may alter high arctic ecosystem structure and function. Increasing N addition from 1 to 5 g N m−2 y−1 did not alter CO2 exchange or vegetation characteristics, suggesting the ecosystem had become N saturated. Factorial additions of both N and P released the ecosystem from N saturation and dramatically increased gross ecosystem photosynthesis (+500%) and ecosystem respiration (+250%), such that the ecosystem switched from a small source of CO2 to a small sink for CO2 at midday during the 2005 growing season. Changes in the component fluxes of CO2 exchange were largely explained by a doubling of the normalized difference vegetation index, a 100% increase in vascular plant cover and dramatic increases in the abundance of several previously rare grass species. Our results clearly demonstrate that high arctic prostrate dwarf-shrub, herb tundra is highly sensitive to low levels of N addition and that future increases in N deposition or N mineralization will likely lead to change in carbon cycling and vegetation characteristics, but the magnitude of the response will be constrained by P availability.