The carbon balance of Arctic ecosystems is particularly sensitive to global environmental change. Leaf respiration (R), a temperature-dependent key process in determining the carbon balance, is not well-understood in Arctic plants. The potential for plants to acclimate to warmer conditions could strongly impact future global carbon balance. Two key unanswered questions are (1) whether short-term temperature responses can predict long-term respiratory responses to growth in elevated temperatures and (2) to what extent the constant daylight conditions of the Arctic growing season inhibit leaf respiration. In two dominant Arctic species Eriophorum vaginatum (tussock grass) and Betula nana (woody shrub), we assessed the extent of respiratory inhibition in the light (RL/RD), respiratory response to short-term temperature change, and respiratory acclimation to long-term warming treatments. We found that R of both species is strongly inhibited by light (averaging 35% across all measurement temperatures). In E. vaginatum both RL and RD acclimated to the long-term warming treatment, reducing the magnitude of respiratory response relative to the short-term response to temperature increase. In B. nana, both RL and RD responded to short-term temperature increase but showed no acclimation to the long-term warming. The ability to predict plant respiratory response to global warming with short-term temperature responses will depend on species-specific acclimation potential and the differential response of RL and RD to temperature. With projected woody shrub encroachment in Arctic tundra and continued warming, changing species dominance between these two functional groups, may impact ecosystem respiratory response and carbon balance.