Species in the Miscanthus genus have been proposed as biofuel crops that have potential to mitigate elevated atmospheric carbon dioxide (CO2) levels and nitrous oxide (N2O) and methane (CH4) emissions. Miscanthus sinensis is widespread throughout Japan and has been used for biomass production for centuries. We assessed the carbon (C) budget and N2O and CH4 emissions over the growing season for 2 years in a M. sinensis-dominated grassland that was naturally established around 1972 in Tomakomai, Hokkaido, Japan, which is near the northern limit for M. sinensis grassland establishment on Andisols. Average C budget was −0.31 Mg C ha−1, which indicates C was released from the grassland ecosystem to the atmosphere. Dominant components in the C budget appeared to be aboveground net primary production of plants (1.94–2.80 Mg C ha−1) and heterotrophic respiration (2.27–3.11 Mg C ha−1). The measurement of belowground net primary production (BNPP) of plants in the M. sinensis grassland was extremely variable, thus only an approximate value could be calculated. Mean C budget calculated with the approximated BNPP value was 1.47 and −0.23 Mg C ha−1 for 2008 and 2009, respectively. Given belowground biomass (9.46–9.86 Mg C ha−1) was 3.1–6.5 times higher than that of aboveground biomass may provide additional evidence suggesting this grassland represents a C sink. Average CH4 emissions across years of −1.34 kg C ha−1 would indicate this grassland acts as an atmospheric CH4 sink. Furthermore, average N2O emissions across years were 0.22 kg N ha−1. While the site may contribute N2O to the atmosphere, this value is lower compared with other grassland types. Global warming potential calculated with the approximated BNPP value was −5.40 and 0.95 Mg CO2 Eq ha−1 for 2008 and 2009, respectively, and indicates this grassland could contribute to mitigation of global warming.