A central question concerning the response of terrestrial ecosystems to a changing atmosphere is whether increased uptake of carbon in response to increasing atmospheric carbon dioxide concentration results in greater plant biomass and carbon storage or, alternatively, faster cycling of C through the ecosystem. Net primary productivity (NPP) of a closed-canopy Liquidambar styraciflua (sweetgum) forest stand was assessed for three years in a free-air CO2-enrichment (FACE) experiment. NPP increased 21% in stands exposed to elevated CO2, and there was no loss of response over time. Wood increment increased significantly during the first year of exposure, but subsequently most of the extra C was allocated to production of leaves and fine roots. These pools turn over more rapidly than wood, thereby reducing the potential of the forest stand to sequester additional C in response to atmospheric CO2 enrichment. Hence, while this experiment provides the first evidence that CO2 enrichment can increase productivity in a closed-canopy deciduous forest, the implications of this result must be tempered because the increase in productivity resulted in faster cycling of C through the system rather than increased C storage in wood. The fate of the additional C entering the soil system and the environmental interactions that influence allocation need further investigation.