ABSTRACTPeatlands lose their valuable carbon (C) sink function under intensive land use and turn into greenhouse gas (GHG) emission hotspots. Despite scarce empirical evidence, paludiculture is expected to have significant GHG mitigation potential for organic soils. This study provides the first comprehensive dataset on full GHG balances for newly established fen paludicultures over a water table (WT) gradient spanning an annual mean WT of −0.29 to +0.04 m, stratified into moderately rewetted conditions (−0.30 < WT < −0.10 m) and rewetted conditions (WT ≥ −0.10 m). We used manual and novel automated chambers to measure annual carbon dioxide (CO2), methane, and nitrous oxide emissions from five typical fen plant species (Carex acutiformis, Phalaris arundinacea, Phragmites australis, Typha angustifolia, and Typha latifolia) newly established as peatland biomass crops in three temperate fen peatlands in southern Germany. Our study confirms a significant GHG mitigation potential for the tested plant species and found a C sink function of paludiculture. The results yield preliminary emission factors of −0.1 and −12.0 t CO2‐equivalents ha−1 year−1 under moderately rewetted conditions (n = 39) and under rewetted conditions (n = 43), respectively. We further identify an optimal annual mean WT of −0.07 m for maximizing GHG reduction across all plant species and sites with a net C sink achieved at a mean annual WT of ≥ −0.12 m. Presuming the conversion of arable land into paludiculture, a mitigation potential of up to −51.9 t CO2‐equivalents is attainable per hectare and year. These findings highlight that well‐managed paludiculture could make a considerable contribution toward achieving the politically targeted CO2 sink function in the LULUCF sector.