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Land‐use/cover change (LUCC) is an important driver of environmental change, occurring at the same time as, and often interacting with, global climate change. Reforestation and deforestation have been critical aspects of LUCC over the past two centuries and are widely studied for their potential to perturb the global carbon cycle. More recently, there has been keen interest in understanding the extent to which reforestation affects terrestrial energy cycling and thus surface temperature directly by altering surface physical properties (e.g., albedo and emissivity) and land–atmosphere energy exchange. The impacts of reforestation on land surface temperature and their mechanisms are relatively well understood in tropical and boreal climates, but the effects of reforestation on warming and/or cooling in temperate zones are less certain. This study is designed to elucidate the biophysical mechanisms that link land cover and surface temperature in temperate ecosystems. To achieve this goal, we used data from six paired eddy‐covariance towers over co‐located forests and grasslands in the temperate eastern United States, where radiation components, latent and sensible heat fluxes, and meteorological conditions were measured. The results show that, at the annual time scale, the surface of the forests is 1–2°C cooler than grasslands, indicating a substantial cooling effect of reforestation. The enhanced latent and sensible heat fluxes of forests have an average cooling effect of −2.5°C, which offsets the net warming effect (+1.5°C) of albedo warming (+2.3°C) and emissivity cooling effect (−0.8°C) associated with surface properties. Additional daytime cooling over forests is driven by local feedbacks to incoming radiation. We further show that the forest cooling effect is most pronounced when land surface temperature is higher, often exceeding −5°C. Our results contribute important observational evidence that reforestation in the temperate zone offers opportunities for local climate mitigation and adaptation.