Among the most extended ecosystems of the temperate zone, the seminatural, dry grasslands constitute a substantial proportion in the Carpathian Basin. The aim of our present study was to investigate the short-term effect of extensive fertilization on the species composition and CO2 exchange of loess grassland at community level. The in situ investigation of the latter parameter have not been yet carried out in Pannonian loess grasslands. Most of the parameters studied showed a considerable interannual variation both in the fertilized and in the control stands. As a result of the treatment, the average species number of the fertilized stand decreased by 22%, which was more significant in the autumn (26%) than in the spring. Diversity values, including Shannon index and species richness, increased by nearly 1.5 times in the year with adequate rainfall compared with the initial values. In general, species richness and the ratio of dicots decreased, while the ratio of therophytes, alien competitors, and C4 plants increased with the addition of fertilizers. Significant carbon sequestration potential was only detected during wet periods in the fertilized grass. The rate of CO2 uptake was found to be nearly five times higher in the fertilized stand and nearly three times higher in the control stand during the wet year compared with the previous, extremely dry year. The CO2 uptake potential of the fertilized grassland exceeded that of the control stand by 12% in the year with high rainfall, while the rate of CO2 exchange dropped by 50% in the dry year in the fertilized stand. Our study reinforced the idea that the decline in species richness was not necessarily followed by the reduction of stand level carbon uptake in a short period due to an insignificant change in ecophysiological functional groups. and S. Z. Czóbel ... [et al.].