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Globally, major efforts are being made to restore peatlands to maximise their resilience to anthropogenic climate change, which puts continuous pressure on peatland ecosystems and modifies the geography of the environmental envelope that underpins peatland functioning. A probable effect of climate change is reduction in the waterlogged conditions that are key to peatland formation and continued accumulation of carbon (C) in peat. C sequestration in peatlands arises from a delicate imbalance between primary production and decomposition, and microbial processes are potentially pivotal in regulating feedbacks between environmental change and the peatland C cycle. Increased soil temperature, caused by climate warming or disturbance of the natural vegetation cover and drainage, may result in reductions of long-term C storage via changes in microbial community composition and metabolic rates. Moreover, changes in water table depth alter the redox state and hence have broad consequences for microbial functions, including effects on fungal and bacterial communities especially methanogens and methanotrophs. This article is a perspective review of the effects of climate change and ecosystem restoration on peatland microbial communities and the implications for C sequestration and climate regulation. It is authored by peatland scientists, microbial ecologists, land managers and non-governmental organisations who were attendees at a series of three workshops held at The University of Manchester (UK) in 2019–2020. Our review suggests that the increase in methane flux sometimes observed when water tables are restored is predicated on the availability of labile carbon from vegetation and the absence of alternative terminal electron acceptors. Peatland microbial communities respond relatively rapidly to shifts in vegetation induced by climate change and subsequent changes in the quantity and quality of below-ground C substrate inputs. Other consequences of climate change that affect peatland microbial communities and C cycling include alterations in snow cover and permafrost thaw. In the face of rapid climate change, restoration of a resilient microbiome is essential to sustaining the climate regulation functions of peatland systems. Technological developments enabling faster characterisation of microbial communities and functions support progress towards this goal, which will require a strongly interdisciplinary approach.