Forests sequester carbon from the atmosphere, and in so doing can mitigate the effects of climate change. Fire is a natural disturbance process in many forest systems that releases carbon back to the atmosphere. In dry temperate forests, fires historically burned with greater frequency and lower severity than they do today. Frequent fires consumed fuels on the forest floor and maintained open stand structures. Fire suppression has resulted in increased understory fuel loads and tree density; a change in structure that has caused a shift from low- to high-severity fires. More severe fires, resulting in greater tree mortality, have caused a decrease in forest carbon stability. Fire management actions can mitigate the risk of high-severity fires, but these actions often require a trade-off between maximizing carbon stocks and carbon stability. We discuss the effects of fire on forest carbon stocks and recommend that managing forests on the basis of their specific ecologies should be the foremost goal, with carbon sequestration being an ancillary benefit.