Tropospheric ozone is a serious air-pollutant, with large impacts on plant function. This study demonstrates that tropospheric ozone, although it damages plant metabolism, does not necessarily reduce ecosystem processes such as productivity or carbon sequestration because of diversity change and compensatory processes at the community scale ameliorate negative impacts at the individual level. This study assesses the impact of ozone on forest composition and ecosystem dynamics with an individual-based gap model that includes basic physiology as well as species-specific metabolic properties. Elevated tropospheric ozone leads to no reduction of forest productivity and carbon stock and to increased isoprene emissions, which result from enhanced dominance by isoprene-emitting species (which tolerate ozone stress better than non-emitters). This study suggests that tropospheric ozone may not diminish forest carbon sequestration capacity. This study also suggests that, because of the often positive relationship between isoprene emission and ozone formation, there is a positive feedback loop between forest communities and ozone, which further aggravates ozone pollution.