Purpose <p>Despite extensive monitoring studies conducted on the eastern Qinghai-Tibetan Plateau, the CO₂ flux dynamics and their environmental drivers in higher altitude regions remain poorly understood, leading to an underestimation of the carbon sequestration potential in these areas.</p> Methods <p>Utilizing an eddy covariance tower and incubation experiments, we quantified the net ecosystem CO₂ exchange (NEE) and environmental influence at the Sexu Wetland.</p> Results <p>The daily CO₂ uptake peaks predominantly between July and August, with the highest recorded value of − 14.3&#xa0;g C m^− 2 d^− 1. The wetland functions as a substantial net annual CO₂ sink, characterized by an uptake of -474.9&#xa0;g C m^− 2 yr^− 1. Photosynthetically active radiation exhibits a significant negative correlation with diurnal NEE, whereas soil temperature shows a positive correlation. Incubation experiments demonstrate that soil CO₂ emissions under both aerobic and anaerobic conditions are comparable at elevated temperatures, implying that the quality of the carbon matrix—marked by low organic carbon content and high ash content—is the principal determinant of soil carbon dioxide emissions. A comparison with eddy covariance data from the Zoige region reveals that the annual CO₂ sink capacity at Sexu is significantly greater, primarily attributed to the reduced soil respiration due to lower soil temperatures at higher altitudes.</p> Conclusions <p>The site’s strong potential as an ecosystem carbon sink is further underscored by its status as a peat-accumulating wetland. Our results highlight the substantial annual CO₂ sequestration potential of high-altitude wetlands, underscoring the need for long-term monitoring to more accurately gauge the carbon cycle dynamics.</p>