Forest soils exhibit huge potential in storing carbon, but may also release large amounts of it if they undergo major changes in land use and environmental conditions. Biogeochemical processes controlling accumulation and release of soil organic carbon (SOC) are not yet sufficiently understood. We investigate the dynamics of SOC depending on its chemical composition below a natural forest (Podocarpus falcatus dominated) and a plantation (Eucalyptus saligna) growing on Nitisols in southern Ethiopia. Soils at the study-site show a huge shift to less negative δ13C values at a depth of 20–30 cm, indicating a change from C4 savanna to C3 forest during the late Holocene. Total organic carbon (TOC), black carbon (BC), and sugars from microbial (rhamnose, fucose) and plant origin (xylose, arabinose) are subjected to compound-specific stable isotope analysis. Turnover characteristics are calculated using a numerical advection–diffusion–decomposition model. Our measurements show significant differences in carbon storage (P<0.05) for both sites (Podocarpus 23.5 ± 3.2 kg SOC m−3; Eucalyptus 18.6 ± 2.7 kg SOC m−3). These differences can be explained with an initial loss of 15–26% of TOC about 50 years ago, induced by clearing the natural forest. After canopy closure, the carbon input below Eucalyptus is 15–34% less than below natural forest. At present, mean residence times (MRTs) of the investigated compounds do not differ between both stands. Sugars show the shortest MRTs in the topsoil with 2–7 years (xylose) and 5–13 years (arabinose) and have been affected the most by clear-cutting. TOC and BC show MRTs of 13–25 years and 20–34 years, respectively. Old C4 carbon below 20 cm has merely been affected by the land use change. Contrary to expectation, our study does not indicate a pronounced recalcitrance of BC.