The global terrestrial carbon sink offsets one-third of the world's fossil fuel emissions, but the strength of this sink is highly sensitive to large-scale extreme events. In 2012, the contiguous United States experienced exceptionally warm temperatures and the most severe drought since the Dust Bowl era of the 1930s, resulting in substantial economic damage. It is crucial to understand the dynamics of such events because warmer temperatures and a higher prevalence of drought are projected in a changing climate. Here, we combine an extensive network of direct ecosystem flux measurements with satellite remote sensing and atmospheric inverse modeling to quantify the impact of the warmer spring and summer drought on biosphere-atmosphere carbon and water exchange in 2012. We consistently find that earlier vegetation activity increased spring carbon uptake and compensated for the reduced uptake during the summer drought, which mitigated the impact on net annual carbon uptake. The early phenological development in the Eastern Temperate Forests played a major role for the continental-scale carbon balance in 2012. The warm spring also depleted soil water resources earlier, and thus exacerbated water limitations during summer. Our results show that the detrimental effects of severe summer drought on ecosystem carbon storage can be mitigated by warming-induced increases in spring carbon uptake. However, the results also suggest that the positive carbon cycle effect of warm spring enhances water limitations and can increase summer heating through biosphere-atmosphere feedbacks.