NORTHERN peatlands can act as either important sources or sinks for atmospheric carbon1,2. It is therefore important to understand how carbon cycling in these regions will respond to a changing climate. Existing carbon balance models for peatlands assume that fluid flow and advective mass transport are negligible at depth3,4, and that the effects of climate change should be essentially limited to the near-surface. Here we report the response of groundwater flow and porewater chemistry in the Glacial Lake Agassiz peat-lands of northern Minnesota to the regional drought cycle. Comparison of field observations and numerical simulations indicates that climate fluctuations of short duration may temporarily reverse the vertical direction of fluid flow through the peat, although this has little effect on water chemistry5. On the other hand, periods of drought persisting for at least 3’5 years produce striking changes in the chemistry of the pore water. These longer-term changes in hydrology influence the flux of nutrients and dissolved organic matter through the deeper peat, and therefore affect directly the rates of fermentation and methanogenesis, and the export of dissolved carbon compounds from the peatland.