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Degraded peatlands are often rewetted to prevent oxidation of the peat, which reduces CO₂ emission. However, the created anoxic conditions will boost methane (CH₄) production and thus emission. Here, we show that submerged Sphagnum peat mosses in rewetted-submerged peatlands can reduce CH₄ emission from peatlands with 93%. We were able to mimic the field situation in the laboratory by using a novel mesocosm set-up. By combining these with 16S rRNA gene amplicon sequencing and qPCR analysis of the pmoA and mmoX genes, we showed that submerged Sphagnum mosses act as a niche for CH₄ oxidizing bacteria. The tight association between Sphagnum peat mosses and methane oxidizing bacteria (MOB) significantly reduces CH₄ emissions by peatlands and can be studied in more detail in the mesocosm setup developed in this study.