A substantial amount of global carbon is stored in mature trees. However, no experiments to date test how warming affects mature tree carbon storage. Using a unique, citywide, factorial experiment, we investigated how warming and insect herbivory affected physiological function and carbon sequestration (carbon stored per year) of mature trees. Urban warming increased herbivorous arthropod abundance on trees, but these herbivores had negligible effects on tree carbon sequestration. Instead, urban warming was associated with an estimated 12% loss of carbon sequestration, in part because photosynthesis was reduced at hotter sites. Ecosystem service assessments that do not consider urban conditions may overestimate urban tree carbon storage. Because urban and global warming are becoming more intense, our results suggest that urban trees will sequester even less carbon in the future.