This work analyzed carbon dioxide exchange and its controlling factors over an alpine grassland on the eastern Qinghai-Tibetan Plateau. The main results show that air temperature and photosynthetically active radiation are two dominant factors controlling daily gross primary production. Soil temperature and soil water content are the main factors controlling ecosystem respiration. Canopy photosynthetic activity is also responsible for the variation of daily ecosystem respiration other than environmental factors. No clear correlation between net ecosystem exchange and environmental factors was observed at daily scale. Temperature sensitive coefficient was observed to increase with larger soil water content. High values of temperature sensitive coefficient occurred during the periods when soil water content was high and grass was active. Annual integrated net ecosystem exchange, gross primary production and ecosystem respiration were -191, 1145 and 954 g C m-2 for 2010, and -250, 975 and 725 g C m-2 for 2011, respectively. Thus, this alpine grassland was a moderate carbon sink in both of the two years. Compared to alpine grasslands on the Qinghai-Tibetan Plateau, this alpine grassland demonstrated a much greater potential for carbon sequestration than others. Annual precipitation is a dominant factor controlling the variation of annual net ecosystem exchange over this grassland. The difference in gross primary production between the two years was not caused by the variation in annual precipitation. Instead, air temperature and the length of growing season had an important impact on annual gross primary production. Variation of annual ecosystem respiration was closely related to annual gross primary production and soil water content during the growing season.