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The terrestrial carbon (C) cycle has received increasing interest over the past few decades, however, there is still a lack of understanding of the fate of newly assimilated C allocated within plants and to the soil, stored within ecosystems and lost to the atmosphere. Stable carbon isotope studies can give novel insights into these issues. In this review we provide an overview of an emerging picture of plant-soil-atmosphere C fluxes, as based on C isotope studies, and identify processes determining related C isotope signatures. The first part of the review focuses on isotopic fractionation processes within plants during and after photosynthesis. The second major part elaborates on plant-internal and plant-rhizosphere C allocation patterns at different time scales (diel, seasonal, interannual), including the speed of C transfer and time lags in the coupling of assimilation and respiration, as well as the magnitude and controls of plant-soil C allocation and respiratory fluxes. Plant responses to changing environmental conditions, the functional relationship between the physiological and phenological status of plants and C transfer, and interactions between C, water and nutrient dynamics are discussed. The role of the C counterflow from the rhizosphere to the aboveground parts of the plants, e.g. via CO2 dissolved in the xylem water or as xylem-transported sugars, is highlighted. The third part is centered around belowground C turnover, focusing especially on above- and belowground litter inputs, soil organic matter formation and turnover, production and loss of dissolved organic C, soil respiration and CO2 fixation by soil microbes. Furthermore, plant controls on microbial communities and activity via exudates and litter production as well as microbial community effects on C mineralization are reviewed. A further part of the paper is dedicated to physical interactions between soil CO2 and the soil matrix, such as CO2 diffusion and dissolution processes within the soil profile. Finally, we highlight state-of-the-art stable isotope methodologies and their latest developments. From the presented evidence we conclude that there exists a tight coupling of physical, chemical and biological processes involved in C cycling and C isotope fluxes in the plant-soil-atmosphere system. Generally, research using information from C isotopes allows an integrated view of the different processes involved. However, complex interactions among the range of processes complicate or currently impede the interpretation of isotopic signals in CO2 or organic compounds at the plant and ecosystem level. This review tries to identify present knowledge gaps in correctly interpreting carbon stable isotope signals in the plant-soil-atmosphere system and how future research approaches could contribute to closing these gaps.