Recent research has shown the value of native vegetation in semi-arid regions for sequestering large amounts of carbon (C), particularly in La Niña years. In 2011, above-average rainfall led to significant vegetation growth and a ‘greening’ of inland Australia. During the period 2008–2012, we measured aboveground growth rates, biomass accumulation and C sequestration by river red gums (Eucalyptus camaldulensis), a commonly occurring tree species in riparian and floodplain ecosystems in semi-arid inland Australia. We measured trees representing the full range of ages, stand densities, canopy conditions and landscape positions. Our data suggest that river red gums can grow up to 6 cm (diameter at 1.3 m aboveground) per year, with most trees growing at a rate of <3 cm per year and sequestering on average, just over 2.5 t C ha−1yr−1 in aboveground woody biomass during high-rainfall and flood conditions. In general, trees in riparian zones grew faster than trees on the floodplain and trees in dense stands grew more slowly than widely-spaced trees. Sites with high aboveground woody biomass at the start of the study had the highest growth and C sequestration rates, indicating that those sites had not reached their C carrying capacity. Healthy crown condition was associated with faster growth in trunk diameter. While stem increment decreased with tree size, C sequestration increased in aboveground woody biomass, illustrating the importance of mature and old-growth trees as C sinks. This study highlights the contribution of semi-arid riparian woodlands for sequestering large amounts of C in aboveground woody biomass during above-average rainfall periods and the need to factor this important sink into global C budgets.