Soil microorganisms control carbon losses from soils to the atmosphere1,2,3, yet their responses to climate warming are often short-lived and unpredictable4,5,6,7. Two mechanisms, microbial acclimation and substrate depletion, have been proposed to explain temporary warming effects on soil microbial activity8,9,10. However, empirical support for either mechanism is unconvincing. Here we used geothermal temperature gradients (>50 years of field warming)11 and a short-term experiment to show that microbial activity (gross rates of growth, turnover, respiration and carbon uptake) is intrinsically temperature sensitive and does not acclimate to warming (+6 °C) over weeks or decades. Permanently accelerated microbial activity caused carbon loss from soil. However, soil carbon loss was temporary because substrate depletion reduced microbial biomass and constrained the influence of microbes over the ecosystem. A microbial biogeochemical model12,13,14 showed that these observations are reproducible through a modest, but permanent, acceleration in microbial physiology. These findings reveal a mechanism by which intrinsic microbial temperature sensitivity and substrate depletion together dictate warming effects on soil carbon loss via their control over microbial biomass. We thus provide a framework for interpreting the links between temperature, microbial activity and soil carbon loss on timescales relevant to Earth’s climate system.