Patterns of carbon retention and distribution across human-modified landscapes have been poorly investigated. In this paper carbon distribution across three forest habitats of a fragmented Atlantic forest landscape in northeast Brazil is examined. Data on tree assemblages (DBH ≥10 cm) inhabiting forest interior stands, forest edges and fragments (2.05–365 ha) were obtained via information from 59 0.1-ha plots (a total of 4,845 stems and 198 tree species), and it was further incorporated in four allometric equations for estimation of above-ground biomass and carbon. Stocks of carbon were highly variable within habitats of Serra Grande, but forest interior plots retained almost three times more carbon (202.8 ± 23.7 TonC/ha) than edge and fragment plots, while these edge-affected habitats exhibited similar scores. Moreover, emergent tree species accounted for the majority of the carbon retained (59.13%) in interior plots with understorey species playing a minor role. However, carbon retained by emergent species decreased by a half across forest edges and forest fragment since large stems (> 70 cm DBH) and very tall trees (> 31 m height) were very rare in these habitats. Finally, a forest cover mapping revealed the occurrence of 213.19 km² of forest interior habitat in the whole Atlantic forest of northeast Brazil. This figure means that only 8% of total remaining forest habitat has a full potential for carbon storage, with the other 92% (edge-affected habitats) storing just a half of that. Our results suggest that habitat fragmentation and the consequent establishment of edge-affected habitats (forest edges and fragments) drastically limit forest capacity for carbon storage across human-modified landscapes since the loss of carbon due to reduced abundance of large trees is not compensated by either canopy or understorey species.