Mycorrhizal fungi play a central role in plant nutrition and nutrient cycling, yet our understanding on their effects on free-living microbes, soil carbon (C) decomposition and soil CO2 fluxes remains limited. Here we used trenches lined with mesh screens of varying sizes to isolate mycorrhizal hyphal effects on soil C dynamics in subtropical successional forests. We found that the presence of mycorrhizal hyphae suppressed soil CO2 fluxes by 17% in early-successional forests, but enhanced CO2 losses by 20% and 32% in mid- and late-successional forests respectively. The inhibitory effects of mycorrhizal fungi on soil CO2 fluxes in the young stands were associated with changes in soil nitrogen (N) mineralization and microbial activities, suggesting that competition between mycorrhizae and saprotrophs for N likely suppressed soil C decomposition. In the mid- and late-successional stands, mycorrhizal enhancement of CO2 release from soil likely resulted from both hyphal respiration and mycorrhizal-induced acceleration of organic matter decay. Synthesis. Our results highlight the sensitivity of mycorrhizal fungi-saprotroph interactions to shifts in nutrient availability and demand, with important consequences for soil carbon dynamics particularly in ecosystems with low nutrient conditions. Incorporating such interactions into models should improve the simulations of forest biogeochemical cycles under global change.