Northern peatlands represent a long-term net sink for atmospheric CO₂, but these ecosystems can shift from net carbon (C) sinks to sources based on changing climate and environmental conditions. In particular, changes in water availability associated with climate control peatland vegetation and carbon uptake processes. We examined the influence of changing hydrology on plant species abundance and ecosystem primary production in an Alaskan fen by manipulating the water table in field treatments to mimic either sustained flooding (raised water table) or drought (lowered water table) conditions for 6 years. We found that water table treatments altered plant species abundance by increasing sedge and grass cover in the raised water table treatment and reducing moss cover while increasing vascular green area in the lowered water table treatment. Gross primary productivity was lower in the lowered treatment than in the other plots, although there were no differences in total biomass or vascular net primary productivity among the treatments. Overall, our results indicate that vegetation abundance was more sensitive to variation in water table than total biomass and vascular biomass accrual. Finally, in our experimental peatland, drought had stronger consequences for change in vegetation abundance and ecosystem function than sustained flooding.