Peatlands play an important role in the Earth system as both persistent carbon dioxide (CO₂) sinks and methane (CH₄) sources. However, large uncertainties remain in our understanding of peatland carbon cycle – climate feedbacks. The majority of research has been conducted in the Northern Hemisphere as most of the global peatland area is located there. Few data have been collected in Southern Hemisphere peatlands and there is a limited basis for predicting how these systems will respond to changing climatic drivers and other anthropogenic forcings such as drainage for agriculture. Furthermore, it is unclear whether our knowledge of peatland functioning and carbon (C) cycling from the Northern Hemisphere translates to systems that have developed under different climatic and hydrologic settings with unique vegetation. To gain a better understanding of peatland carbon and greenhouse gas exchange in a globally distinct and unique peatland type, I used eddy covariance to measure net ecosystem CO₂ exchange (NEE) and CH₄ flux (FCH₄) in an undisturbed New Zealand raised bog over ~2.5 years. The overarching goals of this research were to determine magnitudes of the main components of the ecosystem C budget, gross primary production (GPP), ecosystem respiration (ER), and FCH₄, and their sensitivity to environmental and physical drivers. With respect to CO₂ exchange, high VPD periods restricted the light-saturated photosynthetic capacity during clear sky days. Elevated VPD was also the only condition that led to reductions in daily total GPP, a response likely triggered to reduce transpiration water losses. These results have important implications for the future C sink strength of New Zealand peatlands given a trend toward drier summers with clearer skies and higher VPD. With respect to FCH₄, a severe drought during summer 2013 allowed me to explore the interacting controls of temperature and water table depth. During 2012, a relatively average meteorological year, annual total FCH₄ was 21.5 g CH₄⁻ C m⁻² yr⁻1, whereas total FCH₄ during the drought year (2013) was 14.5 g CH₄⁻C m⁻² yr⁻¹. I found that water table depth was the most important overarching control on FCH₄ over various timescales from weekly to inter-annual. Water table depth regulated the temperature sensitivity of FCH₄, which was highest when the water table was within 50 – 80 mm of the surface. This depth range corresponds to the relatively shallow rooting zone of the dominant vegetation, which may provide much of the substrate for methane production. Kopuatai bog was a very strong C sink compared to Northern Hemisphere bogs and fens. Despite the elevated ER during the drought year, Kopuatai was a sink of 74.5 gC m⁻², which is at the high end of published Northern Hemisphere estimates. The more average meteorological year (2012) resulted in a much larger sink of 152 gC m⁻². This work has revealed the importance of atmospheric controls on plant CO₂ uptake and hydrologic (i.e. water table) effects on ecosystem respiration and FCH₄, when considering the overall C balance. These effects imply that the future C sink capacity of Kopuatai bog may be reduced due to the long-term trend toward drier, sunnier summers and more frequent droughts in the region.