AbstractThe European land carbon uptake has been heavily impacted by several recent severe droughts, yet quantitative estimates of carbon uptake anomalies are uncertain. Atmospheric CO₂ inverse models (AIMs) provide observation‐based estimates of the large‐scale carbon flux dynamics, but how well they capture drought impacts on the terrestrial carbon uptake is poorly known. Here we assessed the capacity of state‐of‐the‐art AIMs in monitoring drought impacts on the European carbon uptake over 2001–2015 using observations of environmental variability and vegetation function and made comparisons with bottom‐up estimates of carbon uptake anomalies. We found that global inversions with only limited surface CO₂ observations give divergent estimates of drought impacts. Regional inversions assimilating denser CO₂ observations over Europe demonstrated some improved consistency, with all inversions capturing a reduction in carbon uptake during the 2012 drought. However, they failed to capture the reduction caused by the 2015 drought. Finally, we found that a set of inversions that assimilated satellite XCO₂ or assimilated environmental variables plus surface CO₂ observations better captured carbon uptake anomalies induced by both the 2012 and 2015 droughts. In addition, the recent Orbiting Carbon Observatory—2 XCO₂ inversions showed good potential in capturing drought impacts, with better performances for larger‐scale droughts like the 2018 drought. These results suggest that surface CO₂ observations may still be too sparse to fully capture the impact of drought on the carbon cycle at subcontinental scales over Europe, and satellite XCO₂ and ancillary environmental data can be used to improve observational constraints in atmospheric inversion systems.