The fraction of photosynthetically assimilated carbon that trees allocate to long-lasting woody biomass pools (biomass production efficiency – BPE), is a key metric of the forest carbon balance. Its apparent simplicity belies the complex interplay between underlying processes of photosynthesis, respiration, litter and fruit production, and tree growth that respond differently to climate variability. Whereas the magnitude of BPE has been routinely quantified in ecological studies, its temporal dynamics and responses to extreme events such as drought remain less well understood. Here, we combine long-term records of aboveground carbon increment (ACI) obtained from tree rings with stand-level gross primary productivity (GPP) from eddy covariance (EC) records to empirically quantify aboveground BPE (= ACI/GPP) and its interannual variability in two European beech forests (Hainich, DE-Hai, Germany; Sorø, DK-Sor, Denmark). We found significant negative correlations between BPE and a daily-resolved drought index at both sites, indicating that woody growth is de-prioritized under water limitation. During identified extreme years, early-season drought reduced same-year BPE by 29 % (Hainich, 2011), 31 % (Sorø, 2006), and 14 % (Sorø, 2013). By contrast, the 2003 late-summer drought resulted in a 17 % reduction of post-drought year BPE at Hainich. Across the entire EC period, the daily-to-seasonal drought response of BPE resembled that of ACI, rather than that of GPP. This indicates that BPE follows sink dynamics more closely than source dynamics, which appear to be decoupled given the distinctive climate response patterns of GPP and ACI. Based on our observations, we caution against estimating the magnitude and variability of the carbon sink in European beech (and likely other temperate forests) based on carbon fluxes alone. We also encourage comparable studies at other long-term EC measurement sites from different ecosystems to further constrain the BPE response to rare climatic events.