Peatlands are effective carbon sinks as more biomass is produced than decomposed under the prevalent anoxic conditions. Draining peatlands coupled with warming releases stored carbon, and subsequent rewetting may or may not restore the original carbon sink. Yet, patterns of plant production and decomposition in rewetted peatlands and how they compare to drained conditions remain largely unexplored. Here, we measured annual above- and belowground biomass production and decomposition in three different drained and rewetted peatland types: alder forest, percolation fen and coastal fen during an exceptionally dry year. We also used standard plant material to compare decomposition between the sites, regardless of the decomposability of the local plant material. Rewetted sites showed higher root and shoot production in the percolation fen and higher root production in the coastal fen, but similar root and leaf production in the alder forest. Decomposition rates were generally similar in drained and rewetted sites, only in the percolation fen and alder forest did aboveground litter decompose faster in the drained sites. The rewetted percolation fen and the two coastal sites had the highest projected potential for organic matter accumulation. Roots accounted for 23–66% of total biomass production, and belowground biomass, rather than aboveground biomass, was particularly important for organic matter accumulation in the coastal fens. This highlights the significance of roots as main peat-forming element in these graminoid-dominated fen peatlands and their crucial role in carbon cycling, and shows that high biomass production supported the peatlands’ function as carbon sink even during a dry year.