Shifting cultivation, a land use strategy of often resource-poor households, centers around the management practice of leaving land fallow for up to 20 years to restore soil fertility. Global pressures, for example, conservation policies or population increase, are in some areas restricting fallow duration to lengths theoretically considered insufficient for soil fertility restoration, which has however been difficult to document empirically. Thus, our main objective was to explore the role of short-term fallow in soil fertility restoration in a shifting cultivation system in Northern Lao PDR with a 4-year longitudinal study of nine upland fields left fallow after a single upland rice cropping. During the first fallow year, surface soil carbon, nitrogen, and permanganate-oxidizable carbon (Pox-C) levels increased an average of 1.06%, 0.06%, and 169 mg kg −1, respectively, after which levels plateau or decline. This trend is ascribed to the organic material input from crop residue and fallow vegetation and was not observed at a 10 cm depth where the major source of organic material is root residue. At this depth, carbon and nitrogen levels gradually declined with an increase only during the second fallow year. It is concluded that the fallowing effect on carbon sequestration, and indirectly soil fertility, depends on how far a soil is removed from its inherent carbon equilibrium level and sequestration capacity. Furthermore, we find that although Pox-C likely reflects a labile soil carbon pool, the advantage lies with the method itself as it requires low resources, thus has potential for locally based monitoring of soil fertility.