Abstract In summer, the atmosphere over extratropical continents is close to moist convective neutrality, whereby near‐surface moist static energy, MSEs ${text{MSE} }{s}$, is tightly constrained by free‐tropospheric saturation moist static energy, MSE500∗ ${text{MSE} }{500}^{ast }$. During extreme moist heat events, however, MSEs ${text{MSE} }_{s}$ often exceeds this limit, indicating a breakdown of moist neutrality. Here we investigate the role of dry‐air entrainment in this breakdown and in intensifying moist heat extremes using reanalysis data and a global climate model. Simulations with different convective entrainment rates show that dry‐air entrainment intensifies extratropical moist heat extremes, a result we interpret using the zero‐buoyancy plume model. Using this model, changes in moist heat extremes under warming are explained by a combination of changes in free‐tropospheric saturation MSE, lower‐tropospheric saturation deficit, and an effective bulk entrainment rate. The results provide a physically‐grounded interpretation of extratropical moist heat extremes and their projected response to climate warming.