Aims Carbon and water cycling are two key processes in circulation of materials and energy flow of sandy grassland ecosystem; recognition of changes in carbon and water cycling is important for understanding the responses of sandy grassland ecosystem structure and function to regional climate change and human activities. Our objectives were to determine the regulations of carbon sequestration and emission, and to examine the relationships of carbon and water fluxes with environmental factors. Methods Chamber method was used to measure carbon and water fluxes in grazed plots and fencing enclosures of different durations in a sandy grassland over a growing season in 2013. Important findings (1) Variance analysis revealed that, during the observational period, the gross ecosystem productivity (GEP), ecosystem respiration (ER), and evapotranspiration (ET) were all in an order of: 17-year enclosure > 22-year enclosure > grazing, with significant differences (p < 0.05) among the treatments; the maximum values were 2.23, 1.65, and 1.94 times of the minimum values, respectively. (2) There was a significant linear and positive correlation between GEP and ET (p < 0.01); ET explained 58% to 60% of the variations in GEP. Water use efficiency (WUE) decreased from 2.85 mumol·nmol~(-1) in the 22-year enclosure to 2.75 mumolnmol~(-1) in the 17-year enclosure, and to 2.10 mumolnmol~(-1) in grazed plots. (3) There were significant linear and positive correlations between GEP, ER and soil water content. Exponential model better fitted the responses of ecosystem respiration to soil temperature. The temperature sensibility coefficient Q_(10) values of ER ranked in the order of 17-year enclosure (1.878) > 22-year enclosure (1.733) > grazing (1.477). In conclusion, enclosure enhanced the carbon and water cycling in degraded sandy grassland ecosystem. However, a 22-year enclosure is not beneficial to this process than 17-year enclosure, suggesting that proper enclosure is conductive to the recovery of degraded sandy grassland and effective to the use of sandy grassland resources.