Abstract Litters of leaves and roots of different qualities occur naturally above‐ and below‐ground, respectively, where they decompose in contrasting abiotic and biotic environments. Therefore, ecosystem carbon (C) and nitrogen (N) dynamics can be strongly affected by the combination of litter position and quality. However, it is poorly understood how C versus N turnover of litters depend on the interplay among plant functional type (PFT), organs, traits and litter position. In a semi‐arid inland dune, soil surface and buried leaf litters and buried fine roots of 25 species across three PFTs (herbs, legume shrubs and nonlegume shrubs) were incubated for 3, 6, 9, 12, 18 and 24 months to investigate litter decomposition and C and N dynamics. Morphological and chemical (nutrient and NMR carbon) traits of initial litters of leaves and fine roots were determined. The litter decomposition rates (k values) of surface leaves and buried fine roots did not differ, but buried fine roots and buried leaf litter decomposed faster than surface leaf litter. Ratios of k values of surface leaves to buried leaves decreased with leaf C:N ratio. Herbs and legume shrubs decomposed faster than nonlegume shrubs for buried fine roots, but not for leaves. At given C loss, buried fine roots had higher N loss than leaf litters; legume shrubs with relatively higher N or lower C:N ratio had higher N loss than nonlegume shrubs. Stronger positive relationships between C and N losses were shown in leaves and legume shrubs than in fine roots and nonlegume shrubs respectively. Synthesis. The generality of faster N release of legume litters at given C release highlights the importance of legumes in N cycling in semi‐arid ecosystems where N is the limiting factor. The dynamics and coordination of C versus N release as a function of litter quality are modulated by litter position and PFT. These findings have important implications for the development of process‐based models on C and N cycles in the context of on‐going global change potentially altering the functional composition of plant communities and the relative quantities and qualities of above‐ground versus below‐ground litter.