This paper presents the space‐time distribution of terrestrial carbon fluxes for the period 1979–1999 generated by a terrestrial carbon cycle data assimilation system (CCDAS). CCDAS is based around the Biosphere Energy Transfer Hydrology model. We assimilate satellite observations of photosynthetically active radiation and atmospheric CO₂ concentration observations in a two‐step process. The control variables for the assimilation are the parameters of the carbon cycle model. The optimized model produces a moderate fit to the seasonal cycle of atmospheric CO₂ concentration and a good fit to its interannual variability. Long‐term mean fluxes show large uptakes over the northern midlatitudes and uptakes over tropical continents partly offsetting the prescribed efflux due to land use change. Interannual variability is dominated by the tropics. On interannual timescales the controlling process is net primary productivity (NPP) while for decadal changes the main driver is changes in soil respiration. An adjoint sensitivity analysis reveals that uncertainty in long‐term storage efficiency of soil carbon is the largest contributor to uncertainty in net flux.