During the past 25 Myr, partial pressures of atmospheric CO2 (Ca) imposed a greater limitation on C3 than C4 photosynthesis. This could have important downstream consequences for plant nitrogen economy and biomass allocation. Here, we report the first phylogenetically controlled comparison of the integrated effects of subambient Ca on photosynthesis, growth and nitrogen allocation patterns, comparing the C3 and C4 subspecies of Alloteropsis semialata. Plant size decreased more in the C3 than C4 subspecies at low Ca, but nitrogen pool sizes were unchanged, and nitrogen concentrations increased across all plant partitions. The C3, but not C4 subspecies, preferentially allocated biomass to leaves and increased specific leaf area at low Ca. In the C3 subspecies, increased leaf nitrogen was linked to photosynthetic acclimation at the interglacial Ca, mediated via higher photosynthetic capacity combined with greater stomatal conductance. Glacial Ca further increased the biochemical acclimation and nitrogen concentrations in the C3 subspecies, but these were insufficient to maintain photosynthetic rates. In contrast, the C4 subspecies maintained photosynthetic rates, nitrogen- and water-use efficiencies and plant biomass at interglacial and glacial Ca with minimal physiological adjustment. At low Ca, the C4 carbon-concentrating mechanism therefore offered a significant advantage over the C3 type for carbon acquisition at the whole-plant scale, apparently mediated via nitrogen economy and water loss. A limiting nutrient supply damped the biomass responses to Ca and increased the C4 advantage across all Ca treatments. Findings highlight the importance of considering leaf responses in the context of the whole plant, and show that carbon limitation may be offset at the expense of greater plant demand for soil resources such as nitrogen and water. Results show that the combined effects of low CO2 and resource limitation benefit C4 plants over C3 plants in glacial–interglacial environments, but that this advantage is lessened under anthropogenic conditions.