The function of peatlands as a large carbon (C) reservoir results from the net C uptake under cold, wet, and acid environments. However, in the context of global warming, the balance between C input and release is expected to change, which may further alter the C sink of peatlands. To examine the response to climate warming of a temperate Sphagnum peatland which has been invaded by vascular plants, a mesocosm experiment was conducted with open top chambers (OTCs) to simulate a moderate temperature increase. Gross primary production (GPP), ecosystem respiration (ER), and methane (CH 4 ) emissions were monitored for 2 years. The CO 2 and CH 4 fluxes were modeled by relating to abiotic and biotic factors, including temperature, water table depth (WTD), and vegetation, in order to calculate the annual C budget. Results showed that the annual cumulated GPP was significantly enhanced by the simulated warming (−602 compared to −501 gC m −2 yr −1 in OTC and control plots, respectively), mainly due to the increase of graminoid biomass by warming, while experimental warming had no significant effect on the annual ER and CH 4 emissions (an output of 615 and 500 gC m −2 yr −1 for ER; 21 and 16 gC m −2 yr −1 for CH 4 emissions in OTC and control plots, respectively). The annual NEE and C budget were not affected by the short-term experimental warming. The mesocosms under both treatments acted as a gaseous C source with 34 and 14 gC m −2 yr −1 output under OTC and control treatment, respectively. This C source was driven by the strong net carbon dioxide (CO 2 ) release during a low WTD period in summer, as CH 4 emissions only accounted for 0.9–2.2% of the total C fluxes. Our study identified the effect of moderate warming on the C fluxes, even on a short-term basis. Also, our findings highlighted that the response of C fluxes to warming largely depends on the WTD and vegetation composition. Thus, long-term monitoring of hydrology and vegetation change under climate warming is essential to examine their interactions in determining the C fluxes in peatlands.