Global ecosystem function is highly dependent on climate and atmospheric composition, yet ecosystem responses to environmental changes remain uncertain. Cold, high-latitude ecosystems in particular have experienced rapid warming1, with poorly understood consequences2,3,4. Here, we use a satellite-observed proxy for vegetation cover—the fraction of absorbed photosynthetically active radiation5—to identify a decline in the temperature limitation of vegetation in global ecosystems between 1982 and 2012. We quantify the spatial functional response of maximum annual vegetation cover to temperature and show that the observed temporal decline in temperature limitation is consistent with expectations based on observed recent warming. An ensemble of Earth system models from the Coupled Model Intercomparison Project Phase 5 (CMIP5) mischaracterized the functional response to temperature, leading to a large overestimation of vegetation cover in cold regions. We identify a 16.4% decline in the area of vegetated land that is limited by temperature over the past three decades, and suggest an expected large decline in temperature limitation under future warming scenarios. This rapid observed and expected decline in temperature limitation highlights the need for an improved understanding of other limitations to vegetation growth in cold regions3,4,6, such as soil characteristics, species migration, recruitment, establishment, competition and community dynamics.