Abstract. Drainage of peatlands is expected to turn these ecosystems into carbon sources to the atmosphere. We measured carbon dynamics of a drained forested peatland in southern Finland over 4 years, including one with severe drought during growing season. Net ecosystem exchange (NEE) of carbon dioxide (CO2) was measured with the eddy covariance method from a mast above the forest. Soil and forest floor CO2 and methane (CH4) fluxes were measured from the strips and from ditches with closed chambers. Biomass and litter production were sampled, and soil subsidence was measured by repeated levellings of the soil surface. The drained peatland ecosystem was a strong sink of carbon dioxide in all studied years. Soil CO2 balance was estimated by subtracting the carbon sink of the growing tree stand from NEE, and it showed that the soil itself was a carbon sink as well. A drought period in one summer significantly decreased the sink through decreased gross primary production. Drought also decreased ecosystem respiration. The site was a small sink for CH4, even when emissions from ditches were taken into account. Despite the continuous carbon sink, peat surface subsided slightly during the 10-year measurement period, which was probably mainly due to compaction of peat. It is concluded that even 50 years after drainage this peatland site acted as a soil C sink due to relatively small changes in the water table and in plant community structure compared to similar undrained sites, and the significantly increased tree stand growth and litter production. Although the site is currently a soil C sink, simulation studies with process models are needed to test whether such sites could remain C sinks when managed for forestry over several tree-stand rotations.