Abstract Mangroves, tidal marshes and seagrasses have experienced extensive historical reduction in extent due to direct and indirect effects of anthropogenic land use change. Habitat loss has contributed carbon emissions and led to foregone opportunities for carbon sequestration, which are disproportionately large due to high ‘blue carbon’ stocks and sequestration rates in these coastal ecosystems. As such, there has been a rapid increase in interest in using coastal habitat restoration as a climate change mitigation tool. This review shows that restoration efforts are able to substantially increase blue carbon stocks, while also having a positive impact on various gaseous fluxes. However, blue carbon increases are spatially variable, due to biophysical factors such as climate and geomorphic setting. While there are potentially hundreds of thousands of hectares of land that may be biophysically suitable for restoration, these activities are still often conducted at small scales and with mixed success. Maximizing potential carbon gains through blue carbon restoration will require managers and coastal planners to overcome the myriad socioeconomic and governance constraints related to land tenure, legislation, target setting and cost, which often push restoration projects into locations that are biophysically unsuitable for plant colonization.