Climate models predict a substantial increase in the frequency of extreme drought, suggesting subsequent impacts on the carbon (C) and water cycles. Although many studies have investigated the impacts of extreme drought on ecosystem functioning, it remains unknown how the timing of extreme drought within a growing season may affect carbon and water cycling. Here we conducted a 3-year field experiment to investigate the influence of seasonal drought timing on ecosystem carbon and water exchange by excluding rainfall (for consecutive 30 days) during three periods of the growing season (May–June, July–August and August–September) in fenced and grazed sites of a semiarid temperate steppe in Inner Mongolia, China. In the fenced steppe, extreme drought reduced growing-season net CO 2 uptake regardless of drought timing, while in the grazed steppe, early-growing season drought caused relatively larger reductions to net CO 2 uptake than drought imposed later in the season. The effect of extreme drought on evapotranspiration (ET) was similar to that of CO 2 exchange at the fenced site, with consistent reductions of seasonally-integrated ET for all treatments compared with the ambient condition. In contrast, at the grazed site, the response of ET to extreme drought was more variable, possibly due to the absence of litter and greater bare ground. Surprisingly, both gross and net carbon uptake declined with increasing ET at the grazed site, while the fenced site showed the positive water-carbon linkage typically seen in semiarid ecosystems. The different responses of CO 2 and water exchanges for the fenced and grazed sites were regulated predominately by soil temperature and soil water content. Together, our results show that drought timing within the growing season can significantly alter drought impacts on ecosystem water and CO 2 exchanges, and that grazing management may further mediate the response.