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Global demand for bioenergy increases interest in biomass‐derived fuels, as ethanol from sugarcane straw. However, straw is the main carbon source to soil and its removal reduces C input, affecting active fractions (dissolved organic carbon, DOC) and C storage. To quantify the effects of straw removal on DOC and C stocks, we built lysimeter system using soil (Rhodic Kandiudox) from sugarcane field. We evaluated four soil depths (1, 20, 50 and 100 cm) and four straw removal rates: no removal NR, medium MR, high HR and total TR, leaving 12, 6, 3 and 0 Mg/ha on the soil surface, respectively. After rainfall, drainage water was collected and analysed for DOC content. Soil C stocks were determined after the 17‐month. Total DOC released at 1‐cm depth amounted to 606, 500, 441 and 157 kg/ha in NR, MR, HR and TR, respectively. Net‐DOC suggests straw as the main source of DOC. Most of DOC in NR (50%) was retained within the 1–20 cm layer, resulting in higher C stock (10 Mg/ha) in the topsoil. In HR and MR, DOC retention was higher within 20–50 cm, suggesting differences in DOC composition. DOC in TR was 40% higher at 20 cm than at 1 cm, indicating C losses from topsoil. Low concentrations of DOC were found at 100‐cm depth, but representing 30% in TR. Straw removal for bioenergy production is sustainable, but we should leave at least 3 Mg/ha of straw to ensure DOC production and soil C storage, taking account the DOC contribution to key soil functions. [ABSTRACT FROM AUTHOR]