Quantifying the interannual variability (IAV) of the terrestrial ecosystem productivity and its sensitivity to climate is crucial for improving carbon budget predictions. In this context it is necessary to disentangle the influence of climate from impacts of other mechanisms underlying the spatiotemporal patterns of IAV of the ecosystem productivity. In this study we investigated the spatiotemporal patterns of IAV of historical observations of European crop yields in tandem with a set of climate variables. We further evaluated if relevant remote-sensing retrievals of NDVI (normalized difference vegetation index) and FAPAR (fraction of absorbed photosynthetically active radiation) depict a similar behaviour. Our results reveal distinct spatial patterns in the IAV of the analysed proxies linked to terrestrial productivity. In particular, we find higher IAV in water-limited regions of Europe (Mediterranean and temperate continental Europe) compared to other regions in both crop yield and remote-sensing observations. Our results further indicate that variations in the water balance during the active growing season exert a more pronounced and direct effect than variations of temperature on explaining the spatial patterns in IAV of productivity-related variables in temperate Europe. Overall, we observe a temporally increasing trend in the IAV of terrestrial productivity and an increasing sensitivity of productivity to water availability in dry regions of Europe during the 1975-2009 period. In the same regions, a simultaneous increase in the IAV of water availability was detected. These findings suggest intricate responses of carbon fluxes to climate variability in Europe and that the IAV of terrestrial productivity has become potentially more sensitive to changes in water availability in the dry regions in Europe. The changing sensitivity of terrestrial productivity accompanied by the changing IAV of climate is expected to impact carbon stocks and the net carbon balance of European ecosystems. © Author(s) 2014.