Peatlands play an important role in global carbon cycling, but their responses to long-term anthropogenically changed hydrologic conditions and nutrient infiltration are not well known. While experimental manipulation studies, e.g., fertilization or water table manipulations, exist on the plot scale, only few studies have addressed such factors under in situ conditions. Therefore, an ecological gradient from the center to the periphery of a continental Canadian peatland bordering a eutrophic water reservoir, as reflected by increasing nutrient input, enhanced water level fluctuations, and increasing coverage of vascular plants, was used for a case study of carbon cycling along a sequence of four differently altered sites. We monitored carbon dioxide (CO₂) and methane (CH₄) surface fluxes and dissolved inorganic carbon (DIC) and CH₄ concentrations in peat profiles from April 2014 through September 2015. Moreover, we studied bulk peat and pore-water quality and we applied δ¹³C–CH₄ and δ¹³C–CO₂ stable isotope abundance analyses to examine dominant CH₄ production and emission pathways during the growing season of 2015. We observed differential responses of carbon cycling at the four sites, presumably driven by abundances of plant functional types and vicinity to the reservoir. A shrub-dominated site in close vicinity to the reservoir was a comparably weak sink for CO₂ (in 1.5 years: −1093 ± 794, in 1 year: +135 ± 281 g CO₂ m⁻²; a net release) as compared to two graminoid-moss-dominated sites and a moss-dominated site (in 1.5 years: −1552 to −2260 g CO₂ m⁻², in 1 year: −896 to −1282 g CO₂ m⁻²). Also, the shrub-dominated site featured notably low DIC pore-water concentrations and comparably ¹³C-enriched CH₄ (δ¹³C– CH₄: −57.81 ± 7.03 ‰) and depleted CO₂ (δ¹³C–CO₂: −15.85 ± 3.61 ‰) in a more decomposed peat, suggesting a higher share of CH₄ oxidation and differences in predominant methanogenic pathways. In comparison to all other sites, the graminoid-moss-dominated site in closer vicinity to the reservoir featured a  ∼  30 % higher CH₄ emission (in 1.5 years: +61.4 ± 32, in 1 year: +39.86 ± 16.81 g CH₄ m⁻²). Low δ¹³C–CH₄ signatures (−62.30 ± 5.54 ‰) indicated only low mitigation of CH₄ emissions by methanotrophic activity here. Pathways of methanogenesis and methanotrophy appeared to be related to the vicinity to the water reservoir: the importance of acetoclastic CH₄ production apparently increased toward the reservoir, whereas the importance of CH₄ oxidation increased toward the peatland center. Plant-mediated transport was the prevailing CH₄ emission pathway at all sites even where graminoids were rare. Our study thus illustrates accelerated carbon cycling in a strongly altered peatland with consequences for CO₂ and CH₄ budgets. However, our results suggest that long-term excess nutrient input does not necessarily lead to a loss of the peatland carbon sink function.