Abstract. The net ecosystem exchange of CO2 (NEE) between the atmosphere and a beech forest (Sorø, Denmark) showed significant interannual variation (IAV) over 13 years (1997–2009) of observations. The forest sequestered, on average, 157 g C m−2 yr−1, ranging from a source of 32 to a sink of 344 g C m−2 yr−1 in 1998 and 2008, respectively. The objectives of this study were to evaluate to what extent and at which temporal scale, climatic variability (through direct response) and changes in ecosystem functional properties (through biotic response) regulated the IAV in the ecosystem carbon balance. To address this question, we performed correlation analysis between the carbon fluxes and climate variables at different time scales. The response of CO2 exchange to climatic variability was significantly higher at short time scales and the limiting factors changed intra-annually. Combinations of climate anomalies in different periods of the year either intensified or attenuated the aggregated ecosystem responses, implying that the changing distribution of climate anomalies, in addition to the average climate change, could have stronger impacts on the ecosystem carbon balance in the future. A semi empirical model was used to estimate a set of parameter time series for each of the 13 years, which was considered to represent the functional properties of the ecosystem. The climate and parameter time series were applied factorially by year to quantify their relative importance for the IAV in carbon flux. At an annual time scale, as much as 77 % of the IAV in NEE could be attributed to the variation in both photosynthesis and respiration related model parameters, indicating a strong influence of functional change. The possible causes for the observed functional change could not be addressed with the available dataset. This demonstrates the need for more targeted experiments, such as long-term measurements of leaf nitrogen content. Our approach incorporated seasonal variation in the ecosystem status and demonstrated a significant role of biotic factors on the carbon dynamics in a typical temperate deciduous forest. The method can be applied at other sites to explore ecosystem behaviour across different plant functional types and climate gradients. Further, this approach showed how important it is to incorporate functional change in process based models, which could guide model development and consequently reduce the uncertainties in long-term projection of global ecosystem carbon balance.