A thorough understanding of the role of microbes in C cycling in relation to fire is important for estimation of C emissions and for development of guidelines for sustainable management of dry ecosystems. We investigated the seasonal changes and spatial distribution of soil total, dissolved organic C (DOC) and microbial biomass C during 18 months, quantified the soil CO2 emission in the beginning of the rainy season, and related these variables to the fire frequency in important dry vegetation types grassland, woodland and dry forest in Ethiopia. The soil C isotope ratios (δ13C) reflected the 15-fold decrease in the grass biomass along the vegetation gradient and the 12-fold increase in woody biomass in the opposite direction. Changes in δ13C down the soil profiles also suggested that in two of the grass-dominated sites woody plants were more frequent in the past. The soil C stock ranged from being 2.5 (dry forest) to 48 times (grassland) higher than the C stock in the aboveground plant biomass. The influence of fire in frequently burnt wooded grassland was evident as an unchanged or increasing total C content down the soil profile. DOC and microbial biomass measured with the fumigation–extraction method (Cmic) reflected the vertical distribution of soil organic matter (SOM). However, although SOM was stable throughout the year, seasonal fluctuations in Cmic and substrate-induced respiration (SIR) were large. In woodland and woodland–wooded grassland Cmic and SIR increased in the dry season, and gradually decreased during the following rainy season, confirming previous suggestions that microbes may play an important role in nutrient retention in the dry season. However, in dry forest and two wooded grasslands Cmic and SIR was stable throughout the rainy season, or even increased in this period, which could lead to enhanced competition with plants for nutrients. Both the range and the seasonal changes in soil microbial biomass C in dry tropical ecosystems may be wider than previously assumed. Neither SIR nor Cmic were good predictors of in situ soil respiration. The soil respiration was relatively high in infrequently burnt forest and woodland, while frequently burnt grasslands had lower rates, presumably because most C is released through dry season burning and not through decomposition in fire-prone systems. Shifts in the relative importance of the two pathways for C release from organic matter may have strong implications for C and nutrient cycling in seasonally dry tropical ecosystems.