The application of biochar to soil has been shown to cause an apparent increase in soil respiration. In this study we investigated the mechanistic basis of this response. We hypothesized that increased CO2 efflux could occur by: (1) Biochar-induced changes in soil physical properties (bulk density, porosity, moisture content); (2) The biological breakdown of organic carbon (C) released from the biochar; (3) The abiotic release of inorganic C contained in the biochar; (4) A biochar-induced stimulation of decomposition of native soil organic matter (SOM) which could occur both biotically or abiotically; (5) The intrinsic biological activity of the biochar results in the liberation of CO2. Our results show that most of the extra CO2 produced after biochar addition to soil came from the equal breakdown of organic C and the release of inorganic C contained in the biochar. Using long-term 14C-labelled SOM, we show that biochar repressed native SOM breakdown, counteracting the release of CO2 from the biochar. A range of mechanisms to describe this negative priming response is presented. Although biochar-induced significant changes in the physical characteristics of the soil, overall this made no contribution to changes in soil respiration. Similarly, the evidence from our study suggests that changes in soluble polyphenols do not help explain the respiration response. In summary, biochar induced a net release of CO2 from the soil; however, this C loss was very small relative to the amount of C stored within the biochar itself (ca. 0.1%). This short-term C release should therefore not compromise its ability to contribute to long-term C sequestration in soil environments