The Tibetan Plateau’s Kobresia pastures store 2.5% of the world’s soil organic carbon (SOC). Climate change and overgrazing render their topsoils vulnerable to degradation, with SOC stocks declining by 42% and nitrogen (N) by 33% at severely degraded sites. We resolved these losses into erosion accounting for two-thirds, and decreased carbon (C) input and increased SOC mineralization accounting for the other third, and confirmed these results by comparison with a meta-analysis of 594 observations. The microbial community responded to the degradation through altered taxonomic composition and enzymatic activities. Hydrolytic enzyme activities were reduced, while degradation of the remaining recalcitrant soil organic matter by oxidative enzymes was accelerated, demonstrating a severe shift in microbial functioning. This may irreversibly alter the world´s largest alpine pastoral ecosystem by diminishing its C sink function and nutrient cycling dynamics, negatively impacting local food security, regional water quality and climate.