1. The mechanisms controlling soil carbon (C) and nitrogen (N) accumulation are crucial for explaining why soils are major terrestrial C sinks. Such mechanisms have been mainly addressed by imposing short-term, step-changes in CO2, temperature and N fertilization rates on either monocultures or low-diversity plant assemblages. No studies have addressed the long-term effects of plant functional diversity (i.e. plant functional composition) on rates of soil C accumulation in N-limited grasslands where fixation is the main source of N for plants. 2. Here we measure net soil C and N accumulation to 1 m soil-depth during a 12-year-long grassland biodiversity experiment established on agriculturally degraded soils at Cedar Creek, Minnesota, USA. 3. We show that high-diversity mixtures of perennial grassland plant species stored 500% and 600% more soil C and N than, on average, did monoculture plots of the same species. Moreover, the presence of C4 grasses and legumes increased soil C accumulation by 193% and 522%, respectively. Higher soil C and N accrual resulted both from increased C and N inputs via (i) higher root biomass, and (ii) from greater root biomass accumulation to 60 cm soil depth resulting from the presence of highly complementary functional groups (i.e. C4 grasses and legumes). 4. Our results suggest that the joint presence of C4 grass and legume species is a key cause of greater soil C and N accumulation in both higher and lower diversity plant assemblages. This is because legumes have unique access to N, and C4 grasses take up and use N efficiently, increasing below-ground biomass and thus soil C and N inputs. 5. Synthesis. We demonstrate that plant functional complementarity is a key reason why higher plant diversity leads to greater soil C and N accumulation on agriculturally degraded soils. We suggest the combination of key C4 grass-legume species may greatly increase ecosystem services such as soil C accumulation and biomass (biofuel) production in both high- and low-diversity N-limited grassland systems.