Purpose: Nowadays, several higher education institutions around the world are integrating sustainability topics into their daily operations, functionality and education systems. This paper presents a case study from a pilot project implemented by the Ernst-Moritz-Arndt-Universität Greifswald (hereafter, Greifswald University), Germany on its way towards a "carbon-neutral university". The purpose of this paper is to share an institutional process targeting a gradual transformation towards achieving carbon neutrality. This might be relevant to other higher education institutions striving for a systematic and progressive change from a traditional system to a low emission or carbon-neutral pathway. Design/methodology/approach: To achieve carbon neutrality, three major transformative strategies were adopted--carbon reduction, carbon offsetting and mainstreaming sustainable actions via teaching and research. Findings: A locally adaptable institutional framework on sustainability was successfully developed to--promote changes in daily operations, implement interdisciplinary research, incorporate sustainability into teaching and education, and enhance outreach programs. Strong commitment from all stakeholders resulted in reduction of the university's carbon footprint from 8,985 to 4,167 tCO[subscript 2e] year[superscript -1]. Further, the unavoidable emissions could be locally offset through enhanced carbon sequestration on the university-owned forests. Originality/value: Based on the experiences of Greifswald University, this paper presents major challenges and success lessons learned during the process of gradual institutional transformation to achieve the target of carbon neutrality.