Plastic film mulching (PM), which contributes to nearly half of the increased crop yields in dryland agroecosystems, exacerbates environmental burdens due to its non-degradable nature. Globally, there is a growing demand to replace non-degradable PM with degradable film mulching (DM), yet its impacts on soil organic carbon (SOC) in dryland agroecosystems remains unknown. Here, using multi-field studies and mesocosm experiments, we found that DM strongly increased but PM reduced SOC storage (0–1 m). This difference is likely attributable to the higher microbial C use efficiency in soil under DM, leading to increased microbial-derived C compared to PM. Under the high roading scenario for 2100, DM could reduce the decomposition of SOC (0–1 m) in China’s drylands by 9.0 ± 1.0 Mg ha–1 year–1 (one standard error) compared with PM. Our findings highlight that DM is a promising alternative to PM for sequestrating SOC and alleviating C loss under climate change in dryland agroecosystems.