Alpine grassland of Tibet is a frangible ecosystem in terms of carbon (C) emission. Yak dung is an important resident energy with about 80 % of yak dung combusted for energy in the north Tibetan plateau. This paper investigated the impact of dung combustion on the C cycle of the alpine grassland ecosystem in north Tibet, China. During the growing season of 2011, from a field survey and household questionnaires, the main impacts of dung collection for fuel on the C cycle of the ecosystem were identified. (1) The C sequestration and storage capacity, including the dung-derived C stored in soil and C captured by vegetation, decreased. The net primary production decreased remarkably because of the reduction of dung returned to soil. (2) In a given period, more C was emitted to the atmosphere in the dung combustion situation than that in the dung returned to soil situation. (3) The energy grazing alpine meadow ecosystem changed into a net C source, and the net biome production of the ecosystem dropped to -15.18 g C/m2 year in the dung combustion situation, 42.95 g C/m2 year less than that in the dung returned situation. To reduce the CO2 emission derived from dung use, the proportion of dung combustion should be reduced and alternative renewable energy such as solar, wind, or hydro energy should be advocated, which is suitable for, and accessible to, the north Tibetan plateau.