The mechanisms controlling soil carbon sequestration are crucial for explaining both why soils store twice as much carbon globally as is contained in terrestrial plants, and how lands can be managed to serve as carbon sinks. Here we address how and why plant diversity and composition determined soil carbon sequestration in a long-term grassland biodiversity experiment. Specifically, we mechanistically address how soil carbon and nitrogen interacted to determine rates of soil carbon sequestration in terrestrial ecosystems. Our results demonstrate that higher numbers of plants led to higher rates of soil carbon and nitrogen sequestration. In the first 12 years of the grassland experiment, annual net soil carbon storage between 0-100 cm soil depth was significantly greater in high diversity plots (0.72 ± 0.08 Mg ha^-1 yr^-1 of soil carbon) than in monoculture plots (0.16 ± 0.08 Mg ha^-1 yr^-1). The presence of legumes, and a legume-grass interaction, had strong positive effects on soil carbon sequestration. When present in the diversity plots, C4 grasses and legume species contributed to increase net carbon sequestration after 12 years by 180% and 363% respectively. Our results broaden the predictions of the diversity-productivity hypothesis to support mechanisms of carbon sequestration and emphasize the potential role of highly complementary plant functional groups to enhance soil carbon sink capacity in N-limited grassland systems under climate change.