Mediterranean dryland sheep farms face interconnected challenges of high greenhouse gas emission intensity and progressive land degradation driven by continuous, unmanaged grazing. Rotational grazing (RG) has been proposed as an integrated response, but field evidence documenting the climate outcomes of real farm-level grazing management transitions remains scarce. This study quantifies the carbon footprint (CF) of a commercial Montado sheep farm in Mediterranean drylands (Alentejo, Portugal) before and after a management transition implemented in 2018, using a cradle-to-farm-gate life cycle assessment and 100-year global warming potentials from the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Prior to 2018, the farm operated under continuous grazing with documented land degradation and soil organic carbon below 2%. In 2018, the farm converted to RG through paddock restructuring, reduced stocking pressure, and a progressive reduction of external feed and fertilizer inputs. Total farm emissions were 34% lower in the post-transition period (1,165.1 t CO2-eq yr-1) than pre-transition (1,756.6 t CO2-eq yr-1), driven by reduced feed, fertilizer, and fuel inputs. Farm operations showed the largest reduction (59%), while enteric fermentation remained the dominant source in both periods. The gross CF of lamb meat decreased from 16.2 to 12.7 kg CO2-eq kg-1 live weight (LW) following the transition. Post-transition soil carbon (C) accrual was estimated at 2.47 to 2.9 t C ha-1 yr-1 across 200 ha of pasture, consistent with early-phase recovery from a severely degraded, low-carbon baseline. When incorporated into net C accounting, the farm shifted to a C sink, giving a net carbon footprint of −7.1 kg CO2-eq kg-1 LW after accounting for soil carbon accrual. These findings demonstrate that a whole-farm grazing management transition can simultaneously reduce emission intensity, generate measurable soil C accrual, and deliver ecosystem services, with direct relevance to C farming policy and climate strategy for Mediterranean dryland livestock systems.