Seagrass ecosystems contain globally significant organic carbon (C) stocks. However, climate change and increasing frequency of extreme events threaten their preservation. Shark Bay, Western Australia, has the largest C stock reported for a seagrass ecosystem, containing up to 1.3% of the total C stored within the top metre of seagrass sediments worldwide. On the basis of field studies and satellite imagery, we estimate that 36% of Shark Bay’s seagrass meadows were damaged following a marine heatwave in 2010/2011. Assuming that 10 to 50% of the seagrass sediment C stock was exposed to oxic conditions after disturbance, between 2 and 9 Tg CO2 could have been released to the atmosphere during the following three years, increasing emissions from land-use change in Australia by 4–21% per annum. With heatwaves predicted to increase with further climate warming, conservation of seagrass ecosystems is essential to avoid adverse feedbacks on the climate system.