<p><strong>Abstract.</strong> Predicting the seasonal dynamics of ecosystem carbon fluxes is challenging in broadleaved evergreen forests because of their moderate climates and subtle changes in canopy phenology. We assessed the climatic and biotic drivers of the seasonality of net ecosystem–atmosphere <span class="inline-formula">CO<sub>2</sub></span> exchange (NEE) of a eucalyptus-dominated forest near Sydney, Australia, using the eddy covariance method. The climate is characterised by a mean annual precipitation of 800<span class="thinspace"></span>mm and a mean annual temperature of 18<span class="thinspace"></span><span class="inline-formula"><sup>∘</sup></span>C, hot summers and mild winters, with highly variable precipitation. In the 4-year study, the ecosystem was a sink each year (<span class="inline-formula">−</span>225<span class="thinspace"></span>g<span class="thinspace"></span>C<span class="thinspace"></span>m<span class="inline-formula"><sup>−2</sup></span><span class="thinspace"></span>yr<span class="inline-formula"><sup>−1</sup></span> on average, with a standard deviation of 108<span class="thinspace"></span>g<span class="thinspace"></span>C<span class="thinspace"></span>m<span class="inline-formula"><sup>−2</sup></span><span class="thinspace"></span>yr<span class="inline-formula"><sup>−1</sup></span>); inter-annual variations were not related to meteorological conditions. Daily net C uptake was always detected during the cooler, drier winter months (June through August), while net C loss occurred during the warmer, wetter summer months (December through February). Gross primary productivity (GPP) seasonality was low, despite longer days with higher light intensity in summer, because vapour pressure deficit (<span class="inline-formula"><i>D</i></span>) and air temperature (<span class="inline-formula"><i>T</i><sub>a</sub></span>) restricted surface conductance during summer while winter temperatures were still high enough to support photosynthesis. Maximum GPP during ideal environmental conditions was significantly correlated with remotely sensed enhanced vegetation index (EVI; <span class="inline-formula"><i>r</i><sup>2</sup></span><span class="thinspace"></span><span class="inline-formula">=</span><span class="thinspace"></span>0.46) and with canopy leaf area index (LAI; <span class="inline-formula"><i>r</i><sup>2</sup></span><span class="thinspace"></span><span class="inline-formula">=</span><span class="thinspace"></span>0.29), which increased rapidly after mid-summer rainfall events. Ecosystem respiration (ER) was highest during summer in wet soils and lowest during winter months. ER had larger seasonal amplitude compared to GPP, and therefore drove the seasonal variation of NEE. Because summer carbon uptake may become increasingly limited by atmospheric demand and high temperature, and because ecosystem respiration could be enhanced by rising temperatures, our results suggest the potential for large-scale seasonal shifts in NEE in sclerophyll vegetation under climate change.</p>