Peatland restoration has been identified as a nature-based solution for the mitigation of climate change. It is therefore important to understand how management actions like restoration of horticultural extracted peatlands will impact carbon dioxide emissions. Rewetting of the extracted peatland can restore the carbon sequestration function on ombrotrophic peat deposits, but effective methods for fen restoration are not yet established. Hydrological conditions are linked to both microbial activity that results in CO2 emissions and plant community establishment that drives carbon uptake; however, optimal hydrological conditions remain unclear. Therefore, the objective of this study is to investigate how hydrological conditions drive peat respiration and vegetation distribution in a restored fen in northeastern Manitoba. Four transects were established along hydrologic gradients at the site, with peat respiration measured at four locations along each transect (16 plots total). Peat respiration was measured with the closed chamber technique. A vegetation survey and biomass sampling were done using quadrats systematically located across the study site to capture a range of hydrological conditions. Peat respiration was mainly controlled by temperature (p<0.001) with greater respiration under warmer conditions. Water level had a secondary negative effect, where wetter conditions led to lower respiration. The coverage of sedges dominated in the wet area, and shrubs and forbs invaded the dry regions. Biomass accumulation was highest in moderate hydrologic conditions (i.e., not flooded or very dry), suggesting that targeting a water table just below the surface is likely to both reduce carbon loss by respiration while maximising plant productivity.