Information on the spatial and temporal patterns of surface carbon flux is crucial to understanding of source/sink mechanisms and projection of future atmospheric CO₂ concentrations and climate. This study presents the construction and implementation of a terrestrial carbon cycle data assimilation system based on a dynamic vegetation and terrestrial carbon model Vegetation-Global-Atmosphere-Soil (VEGAS) with an advanced assimilation algorithm, the local ensemble transform Kalman filter (LETKF, hereafter LETKF-VEGAS). An observing system simulation experiment (OSSE) framework was designed to evaluate the reliability of this system, and numerical experiments conducted by the OSSE using leaf area index (LAI) observations suggest that the LETKF-VEGAS can improve the estimations of leaf carbon pool and LAI significantly, with reduced root mean square errors and increased correlation coefficients with true values, as compared to a control run without assimilation. Furthermore, the LETKF-VEGAS has the potential to provide more accurate estimations of the net primary productivity (NPP) and carbon flux to atmosphere (CFta).