The perturbation of the global nitrogen (N) cycle due to the increase in N deposition over the last 150 years will likely have important effects on carbon (C) cycling, particularly via impacts on forest C sequestration. To investigate this effect, and the relative importance of different mechanisms involved, we used the Generic Decomposition And Yield (G'DAY) forest C–N cycling model, introducing some new assumptions which focus on N deposition. Specifically, we (i) considered the effect of forest management, (ii) assumed that belowground C allocation was a function of net primary production, (iii) assumed that foliar litterfall and specific leaf area were functions of leaf N concentration, (iv) assumed that forest canopies can directly take up N, and (v) modified the model such that leaching occurred only for nitrate N. We applied the model with and without each of these modifications to estimate forest C sequestration for different N deposition levels. Our analysis showed that N deposition can have a large effect on forest C storage at ecosystem level. Assumptions (i), (ii) and (iv) were the most important, each giving rise to a markedly higher level of forest C sequestration than in their absence. On the contrary assumptions (iii) and (v) had a negligible effect on simulated net ecosystem production (NEP). With all five model modifications in place, we estimated that the C storage capacity of a generic European forest ecosystem was at most 121 kg C kg−1 N deposited. This estimate is four times higher than that obtained with the original version of G'DAY (27.8 kg C kg−1 N). Thus, depending on model assumptions, the G'DAY ecosystem model can reproduce the range of dC : dNdep values found in the literature. We conclude that effects of historic N deposition must be taken into account when estimating the C storage capacity of a forest ecosystem.