The mitigation of CO₂ emission into the atmosphere is important and any information on how to implement adjustments to agricultural practices and improve soil organic matter (SOM) stock would be helpful. We studied the effect of tillage and residue management on soil carbon sequestration and CO₂ emissions in loam soil cropped in a winter wheat–corn rotation in northern China. There were five treatments: mouldboard ploughing, rotary tillage and no-tillage with chopped residues (MC, RC and NC), additional no-tillage with whole residue (NW) and mouldboard ploughing without residue (CK). After 5 years of each tillage system, MC and RC had higher annual CO₂ efflux from soil. The CO₂ effluxes were correlated with the ratio of dissolved organic carbon to soil microbial biomass (DOC/MBC) among treatments. This effect may be due to less immobilization of soil carbon by microorganisms under long-time intensive tillage. Although both MBC and DOC showed seasonal variability, when averaged across the sampling period only MBC discriminated between treatments. After 5 years of tillage, all treatments except CK increased SOM (0.16–0.99 Mg C ha⁻¹ year⁻¹) at 0–30 cm depth and NC was the greatest, resulting from historical SOM depletion and large C return from recent residues. Despite the lowest CO₂ flux being from the NW treatment, lower input residue from decreased biomass may have lowered C sequestration. To improve soil C sequestration in rotations, the input of residue and the CO₂ emission should be balanced by adopting appropriate tillage and residue management.