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Climate and atmospheric CO₂ effects on the balance between C₃ and C₄ plants have received conflicting interpretations based on the analysis of carbon isotopic fractionation (&delta;¹³C) in sediments. But, climate and CO₂ effects on the C₃/C₄ balance and &delta;¹³C signal are rarely addressed together. Here, we use a process-based model (BIOME4) to disentangle these effects. We simulated the vegetation response to climate and CO₂ atmospheric concentration (<i>p</i>CO₂) in two sites in which vegetation changed oppositely, with respect to C₃ and C₄ plants abundance, during the Last Glacial Maximum to Holocene transition. The C₃/C₄ balance and &delta;¹³C signal were primarily sensitive to temperature and CO₂ atmospheric partial pressure. The simulated variations were in agreement with patterns observed in palaeorecords. Water limitation favoured C₄ plants in case of large negative deviation in rainfall. Although a global parameter, <i>p</i>CO₂ affected the &delta;¹³C signal differently from one site to the other because of its effects on the C₃/C₄ balance and on carbon isotopic fractionation in C₃ and C₄ plants. Simulated Plant functional types (PFT) also differed in their composition and response from one site to the other. The C₃/C₄ balance involved different competing C₃ and C₄ PFT, and not homogeneous C₃ and C₄ poles as often assumed. Process-based vegetation modelling emphasizes the need to account for multiple factors when a palaeo-&delta;¹³C signal is used to reconstruct the C₃/C₄ balance.