Current predictions of climate change include altered rainfall patterns throughout Europe, continental USA and areas such as the Amazon. The effect of this on soil carbon efflux remains unclear although several modelling studies have highlighted the potential importance of drought for carbon storage. To test the importance of drought, and more importantly repeated drought year-on-year, we used automated retractable curtains to exclude rain and produce repeated summer drought in three heathlands at varying moisture conditions. This included a hydric system limited by water-excess (in the UK) and two mesic systems with seasonal water limitation in Denmark (DK) and the Netherlands (NL). The experimental rainfall reductions were set to reflect single year droughts observed in the last decade with exclusion of rain for 2–3 months of the year resulting in a 20–26% reduction in annual rainfall and 23–38% reduction in mean soil moisture during the drought period. Unexpectedly, sustained reduction in soil moisture over winter (between drought periods) was also observed at all three sites, along with a reduction in the maximum water-holding capacity attained. Three hypotheses are discussed which may have contributed to this lack of recovery in soil moisture: hydrophobicity of soil organic matter, increased water use by plants and increased cracking of the soil. The responses of soil respiration to this change in soil moisture varied among the sites: decreased rates were observed at the water-limited NL and DK sites whilst they increased at the UK site. Reduced sensitivity of soil respiration to soil temperature was observed at soil moisture contents above 55% at the UK site and below 20% and 13% at the NL and DK sites, respectively. Soil respiration rates recovered to predrought levels in the NL and DK sites during the winter re-wetting period that indicates any change in soil C storage due to changes in soil C efflux may be short lived in these mesic systems. In contrast, in the hydric UK site after 2 years of drought treatment, the persistent reduction in soil moisture throughout the year resulted in a year-round increase in soil respiration flux, a response that accelerated over time to 40% above control levels. These findings suggest that carbon-rich soils with high organic matter content may act as a significant source of CO2 to the atmosphere following repeated summer drought. Nonrecovery of soil moisture and a persistent increase in soil respiration may be the primary mechanism underlying the reported substantial losses of soil carbon from UK organic soils over the last 20 years. These findings indicate that the water status of an ecosystem will be a critical factor to consider in determining the impact of drought on the soil carbon fluxes and storage.