Earth system models associate the ongoing global warming with increasing frequency and intensity of extreme events such as droughts and heat waves. The carbon balance of soils may be more sensitive to the impact of such extremes than to homogeneously distributed changes in soil temperature (Ts) or soil water content (θs). One parameter influenced by more pronounced drying/rewetting cycles or increases in Ts is the wettability of soils. Results from laboratory and field studies showed that low θs, particularly in combination with high Ts can increase soil water repellency (SWR). Recent studies have provided evidence that the stability of soil organic matter (SOM) against microbial decomposition is substantially enhanced in water repellent soils. This review hypothesizes that SWR is an important SOM stabilization mechanism that could become more important because of the increase in extreme events. We discuss wettability-induced changes in soil moisture distribution and in soil aggregate turnover as the main mechanisms explaining the reduced mineralization of SOM with increasing SWR. The creation of preferential flow paths and subsequent uneven penetration of rainwater may cause a long-term reduction of soil water availability, affecting both microorganisms and plants. We conclude that climate change-induced SWR may intensify the effects of climatic drought and thus affects ecosystem processes such as SOM decomposition and plant productivity, as well as changes in vegetation and microbial community structure. Future research on biosphere–climate interactions should consider the effects of increasing SWR on soil moisture and subsequently on both microbial activity and plant productivity, which ultimately determine the overall carbon balance.