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The African Sahel-Sudano-Guinean region is one of the largest water limited environments in the world, thus making it highly vulnerable to climate change. Recent studies have shown vegetation greening in the region, but few have investigated the impact of this greening on carbon and water cycles. We used a combination of earth observation (EO) data and a diagnostic model to evaluate the extent of the vegetation greening and its impacts on carbon sequestration potential (i.e., Gross Primary Productivity-GPP) and the water cycle (i.e., Evapotranspiration-ET and Water Use Efficiency-WUE) from 1982 to 2015. Additionally, we evaluated the influence of key climatic variables (i.e., precipitation, temperature, and solar radiation) on vegetation greening, carbon sequestration potential and the water cycle. Our results showed widespread vegetation greening during the first half of the study period (1982–2000), driven mainly by increase in precipitation. However, the rate of greening reduced or became stagnant during the latter half of the study (2000–2015), but did not revert to pre-greening levels of 1980s, implying a persistent ecosystem change. The vegetation greening and increased precipitation resulted in a ~ 17.95% increase in GPP (from ~3.9 PgC/year in 1982 to ~4.6 PgC/year in 2000) and a ~ 21.28% increase in ET (from ~47 mm/year in 1982 to ~57 mm/year in 2015). The WUE showed an overall reduction, mainly attributed to large increases in ET not matched by similar magnitude of increases in GPP. Currently, there is lack of consensus on the magnitude of the contribution of drylands to the global carbon and water cycle. This study shows that drylands undergoing ecosystem change, coupled with climate change, may in future become important contributors to the global carbon and water cycle. Therefore, they could play a key role in future global warming and climate change mitigation strategies. • Widespread vegetation greening from 1982 to 2000, which stagnates from 2000 to 2015 • Precipitation dynamics was the key driver to vegetation greening. • Greening led to increases in gross primary productivity and evapotranspiration. • Overall reduction in water use efficiency was observed in the region. • Potential changes in future role of drylands in the global carbon and water cycle. [ABSTRACT FROM AUTHOR]